Algorand Foundation has $35 million exposure to troubled crypto lender Hodlnaut

Quick Take

  • The Algorand Foundation has $35 million exposure in USDC to Hodlnaut.
  • Crypto lender Hodlnaut halted client withdrawals last month.

The Algorand Foundation said that it has a $35 million exposure in USDC to Hodlnaut, a Singapore-based troubled crypto lender that halted client withdrawals last month.

That figure represents less than 3% of the Algorand Foundation's assets, the firm said, adding that it does not anticipate operational or liquidity issues due to its exposure.

"As part of the Foundation's mission, from time to time, we invest a portion of our surplus treasury capital to generate yield for the purpose of Algorand ecosystem development, and these funds were invested for that purpose," the foundation said on Friday.

Hodlnaut halted client withdrawals on Aug. 8 amid liquidity problems. The firm suffered heavy losses in the Terra ecosystem failure, as The Block reported last month, citing affidavits. Hodlnaut had parked some $317 million in terraUSD (UST), the failed stablecoin, in Anchor Protocol on Terra as a way to pass high yields through to its customers. In May, Terra's stablecoin UST sharply de-pegged from the dollar, inflicting losses of $189.7 million on Hodlnaut, according to the affidavit.

The Algorand Foundation said it is pursuing all legal remedies to maximize asset recovery from Hodlnaut.

On Aug. 29, the Singapore High Court appointed Algorand's nominees, Angela Ee and Aaron Loh of EY Corporate Advisors, to act as the interim judicial managers of Hodlnaut, the foundation noted.

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