Algorand Foundation outlines $35M exposure to crypto lender Hodlnaut

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The Algorand Foundation has uncovered a $35 million USDC hole in its balance sheet as a result of exposure to cryptocurrency lending firm Hodlnote, which has halted withdrawals since August 8.

Algorand is an institutional-grade blockchain infrastructure with embedded smart contract functionality. The Algorand Foundation is a non-profit community organization focused on growing the Algorand ecosystem.

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The announcement was made on the website of the Algorand Foundation on 9 September, with the foundation stating that it is “following all legal measures to maximize the recovery of assets.”

Hodlnaut’s financials first fell into deep water when its $300 million investment in TeraUSD (UST) on Anchor Protocol fell dramatically following the de-pegging of UST and the collapse of the LUNA token, resulting from the crypto lending firm stopped withdrawals and stopped all trading. activity citing liquidity crisis.

Weeks later, the firm was placed under interim judicial management, a form of creditor protection program, by a Singapore court.

The Algorand Foundation said that the majority of investments locked on the platform consisted of “locked, short-term deposits” but are no longer accessible due to Holdnot’s suspension of withdrawals.

However, the Algorand Foundation noted that the $35 million represents less than 3% of the Foundation’s assets and they “estimate not [any arising] operational or liquidity issues,” and that “the funds were a surplus for day-to-day requirements”:

“We invest a portion of our surplus Treasury capital to generate yields with the aim of developing the Algorand ecosystem, and these funds were invested for that purpose.”

Troubled crypto lender Hodlnot is now under an interim judicial management to resolve its liquidity issues.

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Under Singapore’s jurisdiction, corporate entities are placed under interim judicial management for debt restructuring purposes in order to preserve and protect assets at risk prior to the commencement of legal proceedings.

Noting that the Algorand Foundation has played an important role, on 29 August, the Singapore High Court appointed the Foundation’s nominee Angela E to serve as Hodlnot’s interim judicial managers, along with Aaron Loh of EY Corporate Advisors, The purpose of which was to preserve Hodlnot’s property until further court proceedings were initiated.