Hodlnaut cuts staff as Terra’s exposure is revealed

Key points to remember

  • Hodlnaut today released an update on its recovery efforts and court management process.
  • A leaked portion of the court documents reveals that the company had at least indirect exposure to Terra.
  • Hodlnaut also revealed that it would be laying off employees and changing some fares to save on expenses.

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Hodlnaut’s forensic management process revealed exposure to Terra, while the firm decided to lay off employees.

The Hodlnaut procedure continues

Hodlnaut is cleaning up as it continues its turnaround attempts, laying off 80% of its workforce.

The crypto credit company initially froze user withdrawals on August 8. It then launched a request for judicial management on August 16, which will grant the company protection from legal action while a court-appointed agent takes over its management.

Today the firm says that this process is progressing, since its legal representation attended the first conference relating to its request for judicial management on August 18.

Hodlnaut said his application for interim judicial management would be heard on August 22. This process will run alongside his application for judicial management, which has a hearing date set for August 30.

Although access to procedural documents is limited to clients, the details of the procedure have been disclosed. Hodlnaut said months ago that he had no direct exposure to the recently collapsed TerraUSD (UST). However, the leaked documents suggest that he had staked TerraUSD Classic (USTC) via Anchor Protocol.

“Hodlnaut Pte. Ltd has no direct exposure to UST,” a member of the company wrote. “Indirectly, however, there is an impact of depeg UST on Hodlnaut Pte. Ltd.” The odd wording of the statement leaves a lot of confusion, as holding assets in Anchor Protocol would have required exposure to UST (now USTC).

These investment activities caused Hodlnaut to lose $189.7 million, according to the text of the filing.

The company also announced today that it has laid off 80% of its workforce to cut costs.

Today, only 40 employees remain with the company. Hodlnaut says the employees remaining on the team are “the headcount needed for us to perform key functions.”

Hodlnaut further said it would reduce exhaustion rates and change all forward interest rates to 0% as part of its attempts to regain liquidity. This policy will come into effect on August 22.

Finally, Hodlnaut indicated that there is a procedure between him and the Attorney General of Singapore and the Singapore police. He said he was “unable to disclose any information in this regard”.

The company says it will likely release its next update on August 23.

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

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