Hodlnaut declares bankruptcy

Cyptocurrency lending platform, Hodlnaut was forced to halt operations in August 2022 owing to a liquidation caused by the 2022 bear market.

Despite creditors’ demands for liquidation, the owners of the struggling cryptocurrency lender Hodlnaut are attempting to preserve the company.

Hodlnaut’s interim judicial managers issued the sixth affidavit of co-founder Simon Lee on February 28.

According to the document, the company’s founders advocated selling the business as a preferable choice for creditors than dissolving the company.

Lee and Hodlnaut’s other co-founder, Zhu Juntao, have reportedly reached out to other “possible white knight investors,” according to a Bloomberg story.

According to what Lee allegedly said, Hodlnaut co-founders are optimistic that the company’s user base “may be bought and on-boarded on digital-asset platforms controlled or linked with such investors.”

He said that such a purchase would “maximize” the value for creditors. Moreover, the affidavit reinforces Hodlnaut’s readiness to sell the company, as the company negotiated with other possible investors to sell its business and other assets.

As of early February, a number of possible bidders allegedly enquired in purchasing Hodlnaut and its claims against the defunct cryptocurrency exchange FTX.

In January, important Hodlnaut creditors, notably the Algorand Foundation, rejected a restructuring plan proposal that would have allowed the present directors to supervise the company’s activities throughout the reorganization period.

The creditors contended that the reorganization would be ineffective and that it would be in their best interest to liquidate the remaining assets of the company.

Hodlnaut Group owes $160,3 million to Algorand, Samtrade Custodian, S.A.M. FinTech, and Jean-Marc Tremeaux as of December 2022, representing 62% of its total outstanding debt.

Once a prominent cryptocurrency lending platform, Hodlnaut was forced to halt operations in August 2022 owing to a shortage of liquidity caused by the 2022 bear market.

Hodlnaut’s operations were further compromised by the company’s connection to the defunct FTX exchange, with over 500 Bitcoin trapped on Sam Bankman-cryptocurrency Fried’s exchange.

The revelation comes on the heels of another ailing cryptocurrency lender, Voyager Digital, stating on February 28 that its clients voted in favor of a restructuring plan with Binance’s U.S.-based firm, Binance.US.

Binance.US revealed a deal to acquire Voyager’s assets for $1.02 billion in December 2022.