After Celsius, Babel, and Vauld, Singapore-based crypto lender Hodlnaut freezes withdrawals

The cryptocurrency industry took another blow today (Monday, August 8) when Hodlnaut announced it would immediately be ceasing all deposits, withdrawals, borrowing and lending services, and token swaps. The Singapore-based crypto lender cited “recent market conditions” as the basis of its decision.

The announcement further stated that Hodlnaut was halting activity so it could focus on “stabilizing liquidity and preserving assets” to protect its clients’ best interests. They will no longer provide digital payment token (DPT) services and have informed the Monetary Authority of Singapore (MAS) of their intention to withdraw Hodlnaut’s license application.

Hodlnaut was established in 2019 with offices in Hong Kong and Singapore. It allowed investors to earn interest on their digital currency by lending out tokens. Now, Hodlnaut joins firms such as Celsius Network Ltd., Babel, and Vauld in freezing accounts due to the catastrophic devaluation of crypto prices. Though Hodlnaut claims it is acting in the best interest of its investors, this does not change the fact that those same investors cannot access their funds.

Perhaps the silver lining is that Hodlnaut has far fewer clients than its colleagues. In February 2022, the firm claimed to have 1,000 users who had invested over $100 million. This was an exponential increase over the previous year’s $1 million. In comparison, the crypto giant Celsius folded with more than 1.7 million users and over $20 billion in assets.

Mikkel Morch, director of the crypto investment firm ARK36, claimed that since Hodlnaut was a minor service, its freeze on withdrawals should not impact the price of other more significant assets that much. He bases this prediction on the “more bullish” market structures that have taken shape since June. At this time, a “credit crunch” began in the digital currency realm after $2 trillion in assets were lost between May and June.

Hodlnaut is not the only Asian crypto firm affected by the second quarter crash. While it claims to be forming a recovery plan, it is unclear if the lender has any connections to large organizations which filed for bankruptcy after the Terra project collapsed in May. Hayden Hughes of Alpha Impact noted that industry insiders felt Hodlnaut had greater risk management practices than other firms. This points to the possibility that the company had partnered with a trading counterparty. If this is the case, funds could be locked on these external platforms.

At this moment, investors can only do what is perhaps the most challenging task of all in this uncertain situation: wait.