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Holdnaut, the embattled crypto lender, faces police proceedings and revealed that it laid off most of its staff. 

The Singapore-based crypto firm said there are “pending proceedings” between itself and the Singapore Attorney-General and Singapore Police Force, in a blog post published this morning.

Hodlnaut paused withdrawals earlier this month and later filed for creditor protection in Singapore, seeking time to resolve its liquidity issues.

The startup is one of a string of crypto lenders to have frozen customer funds in the wake of the collapse of Terra, the blockchain underpinning the now-defunct stablecoin UST, and the crypto hedge fund Three Arrows Capital earlier this year. Vauld, which is also based in Singapore, is stuck in a similar situation, as is South Asian crypto exchange Zipmex.

Holdnaut has applied to be placed under judicial management. If successful, the move will hand “ultimate decision-making power on all aspects of the company moving forward” to the judicial manager, per today’s blog post.

The startup added that its financial difficulties stem from losses suffered during the UST crash, as well as “unusually high volumes of withdrawals, the overall decline in cryptocurrency prices from their 2021 highs and issues relating to certain user(s) who have deposited substantial amounts of cryptocurrency with Hodlnaut.” 

Hodlnaut has taken dramatic steps to reduce costs. The startup laid off 40 employees or roughly 80% of its staff since halting withdrawals, it said in today’s blog post. “The current team that we have retained are, in our assessment, necessary headcount in order for us to carry out key functions,” the company added.

This is a developing story and will be updated.

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