Hodlnaut seeks legal management after stopping withdrawals

Important takeaways

  • Hodlnaut, a crypto lending company that has suspended user withdrawals, is seeking legal action in Singapore.
  • The company says this process will protect it from legal claims and help it avoid compulsory liquidation.
  • Hodlnaut did not give a date when it may reopen withdrawals for users.

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Crypto lender Hodlnaut has announced that it is seeking legal guidance in Singapore following its decision to suspend withdrawals.

Hodlnaut requests legal proceedings

Hodlnaut has announced its final steps towards recovery.

According to today’s announcement, Hodlnaut will seek legal advice. The firm says it “aims to avoid a compulsory liquidation” which would lead to the sale of user shares.

Court proceedings provide a moratorium or temporary protection against legal claims. Other insolvent companies, such as Zipmex, Vauld and Celsius, have similarly sought protection from legal claims through other legal processes, including bankruptcy filings.

Hodlnaut has asked to be placed under judicial management at the Singapore High Court, a strategy it believes will “provide the best chance of recovery.”

This process involves a court-appointed legal manager managing the company instead of its usual directors. Hodlnaut has applied for Tam Chee Chong, director of Kairos Corporate Advisory Pte Ltd, to act as interim chief justice.

Although the entire process will take time, the company’s interim legal director will help prepare a recovery plan in the meantime.

The Hodlnaut stock exchange said today that, despite its “difficult financial situation”, it is not bankrupt and that not all funds are gone.

The firm also said it is exploring options that would “tap into emergency exit liquidity”, subject to shareholder approval.

Despite this progress, Hodlnaut ultimately could not provide a date when withdrawals would be restored.

Hodlnaut froze withdrawals last week on August 8. It is at least the seventh crypto company to do so this summer, following Celsius, Babel Finance, CoinFLEX, Voyager Digital, Vauld and Zipmex.

Disclosure: At the time of writing, the author of this piece owned BTC, ETH and other cryptocurrencies.

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