Holdnaut – a Singapore-based yield generation platform – is the latest crypto company to indefinitely freeze user deposits and withdrawals.
Hodlnaut in Trouble
In an announcement on Monday, the firm stated that recent market conditions have forced its hand in order to stabilize its liquidity. The pathway to eventually resuming user withdrawals, it claims, “will not be a short process.”
“We would like to reassure you that this difficult decision was taken for us to focus on stabilizing our liquidity and preserving assets, while we work to find the best way to protect our users’ long-term interests,” said Hodlnaut. “We sincerely apologize for the inconvenience that this has caused you.”
The company added that it has already informed the Monetary Authority of Singapore (MAS) that it intends to withdraw its license application. As such, Hodlnaut will cease offering its token swap, lending, and borrowing services.
That said, users will still be able to access their accounts, view balances, and export transaction history and interest statements. It will also continue paying out interest to its users, including 7.25% APY on USDC and USDT stablecoins.
Presently, the firm is working through a timely and feasible recovery plan in collaboration with legal consultants at Damodara Ong. “We… are strategising our recovery plan with our users’ best interests in mind,” it said.
Hodlnaut said that it will provide regular email updates to its users, and answer questions as they arrive over email, Twitter, and Telegram. All other social media run by the company will be turned off. Its next update is slated for Friday, August 19th.
Writing on the Wall
Twitter user “FatManTerra” from the Terra Research forum called out Hodlnaut as being untrustworthy back in June. He likened the platform to Celsius – another lender that froze withdrawals two weeks prior, and has since filed for bankruptcy.
The analyst traced Hodlnaut’s on-chain transactions and found that it had deposited substantial amounts of money into Anchor protocol in January, without informing customers. Anchor was a yield-generating defi service on Terra, a blockchain whose primary cryptos – UST and LUNA – collapsed to worthlessness in May.
FatMan claimed to have confronted Hodlnaut in June regarding the suspicious activity in their trading wallet. “They deny that it belongs to them – they tell some people it’s a custodian, and they tell others it’s a counterparty, but the lack of transparency is alarming,” he said.