The Algorand Foundation, a blockchain infrastructure with embedded smart contracts, has disclosed a $35 million USDC hollow in its balance sheet due to exposure to Hodlnaut.
Algorand Foundation About USDC Exposure to Hodlnaut
It was due to exposure to embattled Hodlnaut, a cryptocurrency borrowing and lending firm based in Singapore, which has halted withdrawal since August 8.
“Today we informed the community about our USDC exposure to Hodlnaut after they suspended withdrawals from their platform on August 8, 2022.”, the Algorand Foundation stated on their website.
Today we informed the community about our USDC exposure to Hodlnaut after they suspended withdrawals from their platform on August 8, 2022.
The full details can be found here: https://t.co/4pLkSiKW7b
— Algorand Foundation (@AlgoFoundation) September 9, 2022
Previously, Hodlnaut invested $3 million into TerraUSD (UST) on the Anchor protocol, but it slumped down drastically after the de-pegging of UST and collapse of the LUNA token.
Following the drop, Hodlnaut then paused withdrawals and suspended all trading activity on their platform due to a liquidity crisis.
Several weeks later, the Singapore court placed the firm under interim judicial management, a creditor protection program for debt restructuring purposes to preserve as well as protect assets at risk prior to onset of legal proceedings.
Algorand Foundation also states that they will be “pursuing all legal remedies to maximize asset recovery and will continue to do so.”
Algorand Also Exposed To Three Arrows Capital (3AC)
The Algorand Foundation said that as a result of Holdnaut’s suspension of withdrawals, the majority of investments locked on the platform are now inaccessible.
The foundation notes that the $35 million represents less than 3% of its assets, they don’t anticipate operational or liquidity issues, and the “funds were a surplus to day-to-day requirements”.
Back in July, the Algorand Foundation was also exposed to bankrupt hedge fund, Three Arrows Capital. They stated that 3AC violated the associated lockup terms during the trade.
Last September, the Algorand Foundation entered a one-off OTC trade with 3AC. We have reason to believe 3AC violated the associated lockup terms and as such are seeking remuneration per the terms of the agreement….
— Algorand Foundation (@AlgoFoundation) July 18, 2022
In addition, the Singapore High Court has appointed the Foundation’s nominees Angela Ee along with Aaron Loh of EY Corporate Advisors on August 29 as the Interim Judicial Managers for Hodlnaut, aiming to protect the crypto lending platform assets.
The Algorand Foundation also said that, they will continue to help fulfill the global promise of the Algorand blockchain by taking responsibility for its sound monetary supply economics, decentralized governance, and healthy and prosperous open-source ecosystem.