The Algorand Foundation has suffered a $35 million USDC hole in its balance sheet due to exposure to the embattled crypto lending firm Hodlnaut. The institutional-grade blockchain infrastructure is pursuing all legal remedies to maximize asset recovery.
Hodlnaut first fell into troubled waters when its $300 million investment into TerraUSD (UST) on the Anchor protocol fell dramatically because of the de-pegging of the algorithmic stablecoin and the collapse of the LUNA token. As such, Hodlnaut had to pause withdrawals and suspend all trading activity. The crypto lender was placed under interim judicial management weeks later by a Singapore court.
The Algorand Foundation revealed that the majority of the investment locked on the platform are locked, short-term deposits. It’s now inaccessible because of Hodlnaut’s suspension of withdrawals. The Algorand Foundation said the $35 million represents less than 3% of the Foundation’s assets. It doesn’t anticipate any arising operational or liquidity issues. The firm added that the funds were a surplus to day-to-day requirements. Algorand Foundation said it invests a portion of its surplus treasury capital to generate yield for the purpose of its ecosystem development.
Hodlnaut has now found itself subjected to Interim Judicial Management to resolve the liquidity issues. Corporate entities, under Singaporean jurisdiction, are placed under Interim Judicial Management for debt restructuring purposes to preserve and protect assets at risk prior to the onset of legal proceedings. The Singapore High Court appointed Algorand Foundation’s nominees Angela Ee and Aaron Loh of EY Corporate Advisors to act as the Interim Managers of Hodlnaut.