Algorand Admits it has Lost $35 Million in the Hodlnaut Implosion – Cryptonews
The ongoing bear market in the cryptocurrency market that started earlier this year has led to many companies suffering immense losses. One of the recent firms to announce losses because of the bear market is Algorand, which has reported a loss of $35 million following the Hodlnaut debacle.
Algorand issued an announcement saying that the Algorand Foundation has reported a loss of $35 million worth of USDC tokens following the company’s exposure to Hodlnaut. Hodlnaut is a crypto lending platform based in Singapore that has been placed under Interim Judicial Management.
Hodlnaut’s changes in management happened after the company suspended withdrawals from the platform on August 8, 2022. The crypto lender joined the suit of decentralized finance (DeFi) companies shutting their doors because of the persistent bear market.
The Algorand funds lost because of the freezing of accounts by Hodlnaut were daily surplus requirements representing not more than 3% of the assets owned by the foundation. The foundation has also said that the effects of halting withdrawals did not result in operational and liquidity issues within the foundation.
The foundation has also said that from time to time, it invests a portion of its surplus treasury capital to generate yield. This is done to generate yield for the benefit of the Algorand ecosystem, and the funds have also been invested in Hodlnaut, a yield farming platform.
In the announcement, Hodlnaut also said that the largest share of investments comprised locked short-term deposits that were no longer available after Hodlnaut took the action of halting withdrawals.
The Algorand Foundation is also looking for legal solutions that will maximize the assets recovered from the crypto lender, and it is committed to continuing working towards this.
The foundation has also revealed that it still has a role to play in the operations of the troubled crypto lender, as it is under interim management. On August 29, the Singapore High Court appointed Angela Ee and Aaron Loh of EY Corporate advisors as Algorand’s nominees to serve as the judicial managers of Hodlnaut. These nominees will be tasked with identifying, preserving, and protecting the assets of Hodlnaut until a further decision by the court.
The Algorand Foundation has also reassured the community of its commitment and dedication toward achieving the global goal of being responsible for sound monetary supply economics, decentralized governance, and open-source systems.
This year’s crypto winter has been one of the harshest in crypto history. The worst of the bear market happened in May after the collapse of the Terra Luna network. In June, crypto prices dropped to levels last seen in 2017.
Celsius was among the first crypto lending platforms to fold after the market collapse between May and June. Companies exposed to the Terra Luna ecosystem and Celsius also felt the p[inch, with some halting their services shortly after.
Amid many companies closing shop, there has been increased regulatory scrutiny from regulators concerned about the safety of investor funds on some platforms. The bankruptcy filings of crypto firms such as Celsius, Three Arrows Capital, and Voyager have also created debate over the classification of user deposits during bankruptcy proceedings.
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