The Algorand Foundation has disclosed a hole in its balance sheet of $35 million USDC caused by exposure to the troubled cryptocurrency lending company Hodlnaut, which has suspended withdrawals since August 8, as reported by Cointelegraph.
Algorand is a blockchain infrastructure designed for institutional use that includes inbuilt smart contract capability. A community-based non-profit organisation called the Algorand Foundation is dedicated to fostering the Algorand ecosystem.
On September 9, the Algorand Foundation made the announcement on its website, announcing that it was “pursuing all legal remedies to maximise asset recovery.”
According to Cointelegraph, Hodlnaut’s financial situation first deteriorated when its $300 million investment in TerraUSD (UST) on the Anchor protocol experienced a sharp decline after it was de-pegged and the LUNA token collapsed. As a result, the crypto lending company halted all trading activity and paused withdrawals, citing a liquidity crisis. A few weeks later, the Singapore court put the company under temporary judicial management, a type of creditor protection scheme.
The majority of the investments locked on the platform, according to the Algorand Foundation, were “locked, short term deposits,” but are no longer accessible because Holdnaut has stopped allowing withdrawals.
Corporate companies in Singapore are subject to interim judicial management for the purpose of debt restructuring in order to safeguard and defend assets before legal action is taken, Cointelegraph noted.
In order to protect Hodlnaut’s assets until further legal action can be taken, the Singapore High Court appointed the Algorand Foundation’s nominees Angela Ee and Aaron Loh of EY Corporate Advisors as the Interim Judicial Managers for Hodlnaut on August 29.
(With insights from Cointelegraph)
Also read: What is Tokenomics and how does it work