The Algorand Foundation disclosed a $35 million USD hole in its balance sheet due to its exposure to cryptocurrency lending firm Hoddlenote, which stopped issuing as of August 8.
Algorand is a modern contract functionality built into an institutional-grade blockchain infrastructure. The Algorand Foundation is a non-profit community organization focused on developing the Algorand ecosystem.
The announcement was made on the Algorand Foundation’s website on September 9, where it said the foundation is “pursuing all legal remedies to maximize asset recovery.”
Huddlenote’s financial situation first fell into deep waters after its $300 million investment in TerraUSD (UST) on the anchor protocol fell sharply following the loss of UST and the collapse of the LUNA token, as a result of which the crypto-lending firm ceased operations and suspended all business operations. Exchange stopped. Motion referring to liquidation problem.
Weeks later, the firm was placed under interim judicial administration under the Singapore Court’s Creditor Protection Program.
On August 8, 2022, we notified the community about USDC’s exposure to Hodlnaut after they stopped deprecating.
Full details available here: https://t.co/4pLkSiKW7b
— Algorand Foundation (@AlgoFoundation) September 9, 2022
According to the Algorand Foundation, most of the investment locked up on the platform consists of “locked-in, short-term deposits,” which are now inaccessible due to Holdnaut’s withdrawal ban.
However, the Algorand Foundation said the $35 million represented less than 3 percent of the foundation’s assets and “didn’t think so.” [any arising] operational or liquidity issues” and added “the money was surplus for daily needs”.
“We invest some of our surplus capital to acquire products for the development of the Algorand ecosystem, and these funds have been invested for this purpose.”
Distressed crypto lender Hodlnaut is now subject to interim judicial administration to address liquidity issues.
Related: 3AC: A $10B hedge fund crashes with founders on the run.
Under Singapore’s jurisdiction, corporate entities are placed under interim judicial administration for the purpose of debt restructuring to preserve and protect assets at risk before legal proceedings commence.
Algorand Foundation played a key role in On August 29, Singapore’s High Court appointed the foundation’s nominees, Angela Yee, along with EY corporate advisers Aaron Loh, to act as Hoddlenot’s interim judicial manager, pending the safeguarding of Hoddlenot’s assets. Further court action will begin.