Crypto lender Hodlnot has stopped withdrawals, token swaps and deposits for its users. The Singapore-based platform said it reached this “difficult decision” on the back of “market conditions” recently.
“We would like to assure you that this difficult decision was taken to stabilize our liquidity and focus on preserving assets, while we do our best to protect the long-term interests of our users,” the lender said in a statement. Let’s work to find a better way.” ,
Hodlnot had no contact with Celsius
Several other platforms had disclosed that they were facing liquidity issues. The High Court of Singapore recently granted crisis-ridden cryptocurrency lender Vault three months of protection from creditors.
The crisis in the industry was mainly behind the demise of Terra, the financial difficulties of Celsius Network and the loan default of Three Arrows Capital. Notably, according to the bankruptcy documents of the court, Hodlnot was also listed as one of Celsius’ institutional clients.
Hodlnot has reportedly informed the Monetary Authority of Singapore (MAS) that it is withdrawing its license application related to regulated digital payment tokens (DPTs). This essentially means that Hodlnot as a crypto provider will stop offering any lending, lending and token swap services. All internal transfers between Hodlnaut accounts have also been disabled.
While users can still access their account details, the platform has not yet given a definite timeline as to when withdrawals will begin. All that is known is that this is expected to be a “long process”.
In the meantime, the platform is keeping only limited channels of communication open, and has vowed to update on the next step on its official blog on August 19.
“We are actively working on the recovery plan, we hope to provide updates and details as soon as possible. We are in consultation with Damodar Ong on the feasibility and timeliness of our intended execution plan and strategizing our recovery plan keeping in mind the best interests of our users,” Hodlnot said.
All users have been asked to refrain from making any fresh deposits, but the platform has said that it will “continue to pay accrued interest as per these rates every Monday until further notice.”
Researcher accuses lender of lying and misrepresentation
According to crypto researcher Fatman, Hodlnote allegedly “lied” and masqueraded as trustworthy to its customers by “falsely posing stablecoin risk exposure”.
Fatman of the Terra Research Forum claims that the rejection of 3AC’s loan request was an effective excuse after receiving the green light from responsible rate management and MAS. “14% for a stablecoin on a CeFi platform is a lot, even higher than on a lending platform by 3AC,” the researcher said.
Citing an unnamed whistleblower who said the lender had significant UST exposure during the dépeg, Fatman also denied Hodlnot’s claim that he had no contact with the anchor.
Based on Fatman’s analysis, during the dapp, things picked up pace and the lender started giving BETH as security to Anchor and took out a total of millions of UST loans to transfer funds to Binance.
Additionally, the researcher alleges that he began burning UST for Luna and sending it to exchanges, perhaps to take advantage of the sharp price disparity at the time.
However, Hodlnot may not be the only platform to circumvent the rules. “The truth is, many of these CeFi platforms are far more irresponsible and degenerate than you might imagine, and the public needs to know the *real* risks behind all that magical 8% stablecoin APY,” FatMan said.
“It is the season of self-detention. The tide is receding. Don’t be the one to be caught ahead,” cautioned the researcher.
How else could the freeze affect the market
The platform, founded in 2019, revealed in February this year that its assets under management (AUM) have crossed $100 million.
But Mikel Morcha, executive director of crypto investment fund ARK36, told bloomberg“HodlNote is a relatively small service, so we do not expect this news to have a significant impact on the price of major assets, especially since the markets show a more bullish structure than when the crypto credit crunch began in June.”