Report: Hodlnaut lost almost $190M in Terra crash

Singapore-based crypto lender Hodlnaut reportedly lost almost $190 million, as a result of Terra’s collapse earlier this year in May. 

According to a report published by Bloomberg, the embattled lender led investors and customers to believe that its exposure to Terra was not as significant.

Hodlnaut downplayed the exposure to Terra

The Interim Judicial Managers’ report obtained by Bloomberg highlighted the actual loss. As per the report,

“… the directors had downplayed the extent of the group’s exposure to Terra/Luna both during the period leading up to and following the Terra/Luna collapse in May 2022.”

The collapse of TerraUSD and its sister token LUNA wiped out a staggering $60 billion from the market. After Hodlnaut’s Hong Kong-subsidiary offloaded and realized their unfortunate investment, they were left with a $189.7 million hole on their balance sheet. 

Documents deleted by founders

The Interim Judicial Managers claimed that Hodlnaut did not maintain a proper record of its finances, which led to gaps in its accounting records. Following the appointment of the Judicial Managers from Ernst and Young by the Singapore High Court, more than 1000 documents were deleted from the lender’s Google Workspace.

Additionally, the managers from EY pointed to the lender’s alarming financial health. While Hodlnaut claims it has assets in the vicinity of $100 million, the managers could only find $25.7 million on centralized exchanges. When looked at in the context of the lender’s liabilities, which exceed $370 million, this ratio presents a problem. 

The report by the Interim Judicial Managers also noted that prior to suspending withdrawals on the platform, Hodlnaut’s Directors asked employees to withdraw their personal funds. This can be corroborated by the $776,292 withdrawal by clients, something that can be seen in the report. 

Hodlnaut suspended withdrawals on 8 August citing market conditions, which most likely referred to the crypto-winter that has left several lenders and firms bankrupt in its wake. A week later, the lender announced that it had filed an application in the Singapore High Court to be placed under judicial management.