The non-profit organization behind the creation and development of the Algorand blockchain infrastructure – Algorand Foundation – has revealed that it had a $35 million USDC exposure to Hodlnaut. It also said it is pursuing all legal pathways to maximize their asset recovery from the embattled cryptocurrency lender.


Despite the hole in the foundation’s balance sheet, the organization does not expect to trigger any operational measures as there are no liquidity concerns. The Algorand Foundation said in an official announcement that these funds were surplus to the daily requirements and represented less than 3% of its total asset value.


The majority of Algorand’s investment in the embattled cryptocurrency lender consisted of locked, short-term deposits, which became inaccessible after Hodlnaut announced the suspension of withdrawals and deposits on its platform on 8th August 2022.


Hodlnaut’s issues were ignited by the deployment of more than $300 million in TerraUSD (UST) on Anchor Protocol, a service that promised a maximum of 20% profit on UST staking. The collapse of the Terra ecosystem tokens proved to be catastrophic for the platform and set off the domino of liquidity liquidity problems.


In a bid to stay afloat because of its liquidity crisis, Hodlnaut laid off approximately 80% of its workforce and slashed interest rates to a 0% annual percentage rate. Hodlnaut was then placed under Interim Judicial Management by the Singapore High Court, to protect it from legal proceedings by third parties and allow it to rehabilitate temporarily.


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