On August 8, 2022, Hodlnaut announced that it was suspending the ability for individuals to withdraw from their platform leaving a large number of individuals in limbo as people tried to figure out how bad the shortfall was. In the beginning, Hodlnaut had declined the "rumor" that the majority of user funds had been converted into now infamous Terra Blockchain's TerraUSD and staked on the Anchor protocol. Once they froze the withdrawals though and sought protection from the Singapore Court System everything began to come to light. What we all found out was much much worse than I think most people had assumed.
So how deep in the hole was Hodlnaut? Well, it turns out that they had converted almost everything (BTC, ETH, USDC, DAI, etc.) into UST aka the algorithmic stablecoin on the LUNA blockchain, and what led to its eventual downfall. Roughly $288 million was owed to individuals with Hodlnaut only having roughly $88 million for a stunning loss of $200 million resulting in only having $0.31 cents for every $1. Needless to say it was a huge and ultimately insurmountable deficit. It has long been the will of not only the managers in charge but also the will of the largest creditors that they just wanted to be liquidated.
For the last few months, the former heads of the company (aka the founders) tried every trick in the book to prevent the liquidation from happening and instead created proposals that promised much better returns without the founders ever putting a dime into it. Thankfully the courts, managers, and credits all saw this farce for what it was and each and every time this was brought up the courts stuck it down. There was even a brief time when they tried to pull off a trade behind everyone's backs and inject other funds into the project to "save" it. Now though the courts have officially ended this saga and approved the liquidation.
I have never been part of something like this before so it will be interesting to see how it plays out. For instance, if Hodlnaut had liquidated at the beginning of the year everyone would be much better off. How long the process will take and the steps that will be required have yet to be announced but I am looking forward to at least recovering part of what I am owed. Till I receive what I am owed I will continue to think of it as money that is gone so I will be thrilled with whatever I am able to get back!
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