Algorand has a $35M exposure to troubled crypto lender Hodlnaut

A $35 million USDC exposure in troubled Singapore-based lender Holdnaut has been disclosed by Algorand Foundation.

Algorand Foundation claims that its $35 million exposure is less than 3% of its assets and is adequate for day-to-day needs. It is therefore unlikely to get impacted or experience any liquidity problems.

As part of its objective, the foundation “invests a portion of our surplus treasury capital to generate yield for the purpose of Algorand ecosystem growth, and these funds were invested for that purpose,” the foundation further stated its motivations for investing in Hodlnaut.

It claimed that the majority of the investments were short-term locked deposits that were rendered inaccessible by Holdnaut’s stoppage of withdrawals.

The organization asserted that it is currently using every legal avenue at its command to recover its funds.

Algorand also has exposure to troubled 3AC

It is important to note that Algorand also has exposure to the collapsed cryptocurrency hedge fund Three Arrows Capital. The foundation and the hedge fund engaged in a single OTC trade, but 3AC broke the lockup restrictions, according to court documents.

Last September, the Algorand Foundation entered a one-off OTC trade with 3AC. We have reason to believe 3AC violated the associated lockup terms and as such are seeking remuneration per the terms of the agreement….

— Algorand Foundation 🐍 (@AlgoFoundation) July 18, 2022

Notably, Hodlnaut was placed under Interim Judicial Management following its August 8’s announcement of suspending user withdrawals on its platform. According to court documents, Hodlnaut lost $189.7 million out of a total holding of $317 million in Terra USD (UST) before the crash. 

A recent update by Algorand Network dramatically enhanced network capacity. State Proofs, which enable cross-chain connections and transfers without the need for a bridge or validator networks, were also added to the network by the upgrade. According to its official statement, this would potentially solve the problems that blockchain interoperability is now facing.

The network, which takes pride in being the only carbon-neutral blockchain network, is also FIFA’s official blockchain partner and will power its forthcoming non-fungible tokens, as TheCoinRise reported.