Hodlnaut Files for Creditor Protection: Protecting User Bitcoin & Ethereum?

In the recent week, Hodlnaut (a crypto lending venue) restricted withdrawals and deposits, sparking widespread concern among users. Just like the rest of its fellow platforms, the Singaporean venture has cited market conditions as a key factor. But instead of immediately selling user Bitcoin and Ethereum to cover debts, Hodlnaut is exploring a different path.

After pausing customer withdrawals last week, Singapore-based cryptocurrency lender Hodlnaut has filed for creditor protection, allowing it more time to recover. More than a week ago, the troubled crypto lender Hodlnaut froze user assets on the platform. Now, the Singapore-based firm has applied for judicial management.

Hodlnaut informed its users on Tuesday via an announcement that they have applied to a Singapore-High Court for creditor protection. The application will firstly seek to prevent forced liquidation. Hodlnaut applied for creditor protection last August after suffering around $189 million in losses due to the Terra ecosystem exposure, which collapsed in May 2022.

Hodlnaut is a crypto platform aiming to avoid a forced liquidation of its assets. In a recently released blog post, the firm asserted that it was aiming to avoid a forced liquidation of its assets. They labeled the same as a “suboptimal solution” because selling user Bitcoin and Ethereum at potentially distressed prices would ultimately harm creditors and users alike. Creditor protection offers a potential pathway to restructuring and finding a more favorable solution for all stakeholders.