If it was not enough that billions of dollars evaporated from the value of several crypto assets, another company is facing liquidity issues. Celsius, Three Arrows Capital (3AC), Terra Luna, and many other crypto industry giants bankrupted, and Hodlnaut may be next.
Related blog: Crypto news summary: Meta, Coinbase, and Solana hack
Holdnaut stopped withdrawals
The collapse of the well-known Terra Luna and the bankruptcy of prominent cryptocurrency hedge fund 3AC marked the beginning of the crypto lending crisis. The simultaneous market turbulence had a cascading effect on cryptocurrency lenders who had exposure to both the Terra ecosystem and the hedge fund. As a result, major cryptocurrency lenders like Voyager Digital, Celsius, and Blockchain.com ceased their operations and are probably gone forever.
Hodlnaut is another victim of the domino effect. It has previously denied ever buying UST and avoided exposure to 3AC. However, many reports and on-chain data have shown that the lending company once had $150M+ worth of UST in its possession. Due to market conditions, its services have been discontinued, and recovery initiatives are currently being actively researched according to their tweet.
Dear users, we regret to inform you that we will be halting withdrawals, token swaps and deposits immediately due to recent market conditions. We have also withdrawn our MAS licence application. Here is our full statement https://t.co/5KfHUBzWsn Our next update will be on 19 Aug.
— Hodlnaut (@hodlnautdotcom) August 8, 2022
Hodlnaut also said that it had withdrawn its application for a regulatory license in Singapore, making it impossible for it to continue to provide token swap features. Reportedly, all of the cryptocurrency lending platform’s social media accounts besides the official Twitter and Telegram accounts will be suspended. In addition to the prohibitions on social media, creator Juntao Zhu has made his Twitter account private.
You may also read: US Senate passes large social and climate package
The crypto community reacted angrily to the obvious failure of another crypto lending company, with many urging investors to deposit and store their cryptocurrencies somewhere off the exchanges. Otherwise, you can lose it. Others emphasized the cascading repercussions that are still being felt today from the UST collapse in May.
But the question still remains; when is this going to end? Several billion-dollar crypto companies faced liquidity issues and were forced to declare bankruptcy. If this does not stop, it could further draw the whole crypto market down and Bitcoin below its critical $20,000 mark.