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Hodlnaut Founders Say Sale of Platform Better for Creditors

The Singapore-based exchange owes S$160.3 million, or 62% of outstanding debt, to Algorand Foundation, Samtrade Custodian, S.A.M. Fintech and Jean-Marc Tremeaux.

Photo by Dan Burton / Unsplash

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The co-founders of Singapore-based crypto lender Hodlnaut are proposing to sell the business to potential investors, saying that this would protect creditors from the liquidation of the firm, according to a Bloomberg report on Wednesday.

Co-founders Simon Lee and Zhu Juntao have been seeking "white knight investors" who can acquire and onboard Hodlnaut's user base onto their digital asset platforms, ultimately maximizing the value for creditors, the report said.

Related: "Various Parties" Interested in Buying Hodlnaut

Bloomberg has previously reported in February, that "various parties who are interested in acquiring" Hodlnaut and its FTX claims have contacted interim judicial managers overseeing the company, and that the potential investors are in the process of signing non-disclosure agreements with judicial managers.

This development follows news in January that Hodlnaut's creditors are seeking the firm's liquidation after rejecting a proposed restructuring plan that would have seen its directors continue to manage the business. In a filing dated 11 January by Hodlnaut's court-appointed interim judicial managers, creditors said liquidation better serves their interests.

The Singapore-based exchange owes S$160.3 million, or 62% of outstanding debt, to Algorand Foundation, Samtrade Custodian, S.A.M. Fintech and Jean-Marc Tremeaux.

FTX accounted for about 72% of Hodlnaut's digital assets on centralized exchanges, with an estimated market value of S$18.5 million.

Hodlnaut halted withdrawals without warning on 8 August 2022, after losing $190 million due to its exposure to LUNA despite claiming on a Discord server that it had zero exposure.

Police investigation

The Singapore based crypto lender has been under investigation by the Commercial Affairs Department (CAD) for fraud offences.

Singapore Police Force (SPF) had also demanded Hodlnaut hand over US$127,245,996 worth of USDC and USDT from the account under Samtrade Custodian Limited.

The SPF said the CAD is investing Hodlnaut and its directors for offences under Sections 417 and 424A of the Penal Code 1871. Under 417, the minimum penalty is “imprisonment for a period of up to 3 years and a fine, or either’ and those guilty under 424A could face up to 20 years in prison, a fine, or both.

Read more: Hodlnaut Directors Could Face 20 Years in Prison


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