Embattled cryptocurrency lender Hodlnaut downplayed its exposure to the shattered digital token ecosystem created by fugitive Do Kwon, but suffered losses of nearly $190 million in the wipeout. Bloomberg reports:
The loss is among the findings of an interim report by court leaders seen by Bloomberg News. It is the first such report since a Singapore court in August granted Hodnaut protection from creditors to work out a recovery plan. “The directors appear to have downplayed the extent of the group’s exposure to Terra/Luna both before and after the May 2022 Terra/Luna collapse,” the report said.
TerraUSD’s algorithmic stablecoin Kwon and sister token Luna took a $60 billion hit in May when confidence in the project evaporated, exacerbating this year’s crypto crash. Hodlnaut’s Hong Kong unit took a loss of nearly $190 million when it unloaded the stablecoin as its stated peg to the dollar weakened. In a July 21 letter, Hodlnaut’s directors “made a U-turn” on the impact and informed the Singapore Police Department that the digital assets had been converted to TerraUSD, the report said. The report says that a significant portion of the latter was lent on the Anchor Protocol, a decentralized financial platform built on the Terra blockchain.
Hodlnaut, which operates from Singapore and Hong Kong, stopped withdrawing funds in August. A court report says more than 1,000 deleted documents from Google’s Godnaut workspace could help shed light on the business. Court bosses have been unable to obtain several “key documents” in relation to Hodlnaut’s Hong Kong unit, which owes $58.3m to Hodlnaut Pte in Singapore. About S$776,292 appears to have been withdrawn by some employees between July and when the withdrawals were stopped in August, the report said. Most of the company’s DeFi investments were made through its Hong Kong division, the report added.
