Hodlnaut founders propose selling the lender rather than liquidating it: report

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The founders of Singaporean digital asset lender Hodlnaut have been courting investors in a bid to sell the collapsed company rather than liquidate it as proposed in January.

Co-founder Simon Lee revealed in an affidavit that he and fellow co-founder Zhu Juntao have been in discussions with a few “potential white knight investors.” In the affidavit, which Bloomberg saw, the founders claimed that Hodlnaut is best served by a sale and not liquidation.

Hodlnaut halted withdrawals, swaps, and deposits in early August, blaming “recent market conditions” for its woes. The situation quickly escalated, and weeks later, it was granted creditor protection by a Singaporean court. It later revealed that despite claims to the contrary, it had suffered a major blow when Terra’s LUNA and UST tokens collapsed, incurring a $190 million loss.

While Lee and Juntao have proposed a restructuring plan for the lender, creditors in January rejected it and pushed for liquidation. The creditors—who included the Algorand Foundation, which supports the development of the Algorand blockchain network—told a Singaporean court that their interests are best served by winding down the company.

As Bloomberg now reports, the two founders are still fighting against liquidation. In his affidavit, Lee claimed that through a sale, Hodlnaut’s value could be maximized for its investors.

Lee pointed out that “the Hodlnaut user base can be acquired and on-boarded on digital-asset platforms owned or affiliated to such investors.”

This is not Lee’s first attempt to save the collapsed lender. He has previously trimmed the workforce by 80% to save costs, but this did little to salvage the lender’s plight.

While Lee and Juntao work to sell the lender, Singaporean authorities are probing the pair over allegations of fraud and misrepresentation. The two are accused of lying about their exposure to LUNA and UST, an offense punishable under Singapore’s Penal Code of 1871.

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