In the recent week, Hodlnaut (a crypto landing venue) restricted withdrawals and deposits. Just like the rest of its fellow platforms, the Singaporean venture has cited the disastrous market conditions as an escape route. Nonetheless, a noteworthy thing here is that the crypto startup kept above $187M in TerraUSD (UST), which has been rebranded as TerraClassicUSD (USTC).
Hodlnaut Files in Singapore for Creditor Protection
The speculations point out that the suspension placed by Hodlnaut on its services was another instance of the impact generated by the abrupt collapse of the ecosystem of Terra (LUNA). Keeping this scenario in view, Hodlnaut has submitted a filing with the Singapore High Court for protection from its creditors by being categorized as in judicial management. Recently, a blog post has been released by the company on its formal website noting that it was pursuing to escape from its assets’ enforced liquidation.
The firm categorized this to be a “suboptimal solution” as they would be required in that case to trade the crypto assets of their consumers including Ethereum and Bitcoin at the present prices which are substantially low. Nonetheless, the company is confident that going through judicial management is a viable solution to recover in a better way. Hence, it added that the purpose of the filing is to be classified under judicial management.
According to the law being practiced in Singapore, the term “judicial management” denotes a rehabilitation mechanism offered to firms that are under a pressure related to finance. The respective procedure requires an autonomous Court officer to be appointed substituting the directors of the respective platform for its management. Apart from that, a moratorium is also provided by the judicial management filing to confront the legal proceedings and claims.
While explaining the significance of this move, the formal post brought to the front that the respective interval will let the venue have some convenience in directing its attention towards the endeavors dealing with the recovery strategy as well as the restoration of the firm. Although the application has been filed by the firm, it disclosed that no hearing has yet been taking place in the court. The platform projects that the entire process will be finished within the next few months and is planning accordingly.
More and More Crypto Firms Apply for Moratoriums
Hodlnaut is now listed among the other crypto venues which have filed for creditor protection. The latest among them is Zipmex having gained approval on Monday, whereas Three Arrows Capital is still under the credit of up to several billion dollars following its crash that took place because of the leverage in June.
Hodlnaut considers that after being positioned under juridical management it will have the capability of creating a recovery strategy to evade the customer assets’ liquidation. Notwithstanding this crypto winter (which has been bothering the industry throughout this year up till now), prominent crypto tokens like Bitcoin and Ethereum are showing some retrieval signs. However, the increasing number of crypto companies moving toward moratoriums signifies a relatively pessimistic approach.
