Crypto Lender Hodlnaut Applies for Judicial Management in Singapore
- The judicial management law allows the Singaporean court to appoint a judicial manager, who takes over the role of a director temporarily, to help struggling companies.
- If approved, the application will give Hodlnaut temporary protection from legal claims, allowing it to focus on a recovery plan that does not involve liquidating customer assets at a loss.
The Supreme Court building in Singapore, 12 October, 2016. Sing Studio/Shutterstock
Crypto lender Hodlnaut has filed an application with the Singapore High Court seeking judicial management to avoid forced liquidation of assets, the company said in a press release on 16 August.
According to the announcement, Hodlnaut requested to be put under judicial management on 13 August, only five days after it paused all withdrawals, deposits, and trading on its platform. At the time, the company said it was working with Damodara Ong LLC to strategize a recovery plan with “our user’s best interests in mind”. The company said in today’s press release that:
“We are aiming to avoid a forced liquidation of our assets as it is a suboptimal solution that will require us to sell our users’ cryptocurrencies such as BTC, ETH and WBTC at these current depressed asset prices. Instead, we believe that undergoing judicial management would provide the best chance of recovery.”
The judicial management law gives the Singaporean court the right to appoint a judicial manager — who temporarily takes over the responsibilities of the director — to help struggling firms. The management of Hodlnaut has recommended that Tam Chee Chong becomes its judicial manager, saying “he will be able to execute our recovery plan and restructure the business effectively”.
Although their application is yet to be hear in court, Hodlnaut has given 19 August as the next date it will provide an update to the situation. If it is approved, the application will temporarily safeguard the crypto lender from any legal claims, giving it time to focus on its “efforts on the recovery plan to rehabilitate the company”.
- The requirement to deposit customer assets into a statutory trust comes as a result of a MAS public consultation from October 2022 focused on reducing risk in crypto trading.
- Singapore’s central bank also restricted crypto firms from facilitating lending and staking to retail customers, though the services are still available to institutional clients.
Monetary Authority of Singapore building. The Straits Times
- Crypto.com has once again expanded its regulatory achievements with the acquisition of a major payment institution license for digital payment token services in Singapore.
- The license, for which the company received an in-principle approval last June, enables the exchange to provide a greater range of payment services in Singapore.
- The now rebranded custody arm of crypto exchange Binance, called Ceffu, is planning to apply for a Capital Markets Service license with the Monetary Authority of Singapore.
- If it is able to acquire the license, Ceffy plans to offer custodial services to only institutional and high net-worth individuals in Singapore.