Hodlnaut denies losses on UST but questions remain

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Hello reader,

If there was a comic on the latest crypto tales, one of the blurbs on Winnie the Pooh would probably say: “In a way, Piglet, we are all exit liquidity for Hodlnaut and Alameda.”

These days, there’s always so much to talk about crypto – a method to do away with the need to trust in institutions altogether and instead rely on an algorithm. Add chaos, lack of transparency, and millions of dollars to the mix, and we have our hot story for the day.

My colleague Scott has gone all Sherlock Holmes on this piece to give our readers a look into what may have happened at Hodlnaut, which could be the newest possible entrant to the great crypto bloodbath of 2022.

Today we look at:

• Hodlnaut’s potential exposure to the Terrapocalypse
• A crypto firm’s deal with Mastercard to expand into Indonesia
• Other newsy highlights such as Polygon’s entry into Disney’s accelerator program and Alibaba’s latest layoffs.

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Eyes on Hodlnaut

Image credit: Timmy Loen

Over US$187 million in TerraUSD (UST) held by Hodlnaut, a crypto lender approved by the Monetary Authority of Singapore in March, may have been exposed to the collapse of the Terra blockchain protocol in May.

An on-chain analysis by industry insiders and confirmed by Tech in Asia found that two wallets, linked to Hodlnaut by crypto intelligence firm Nansen, had been used to move large amounts of UST into Terra’s Anchor protocol.

Hodlnaut, which at one point was managing close to US$1 billion in assets, denies any illegal activity.

• What exactly happened here?: The two wallets linked to Hodlnaut had been used to move large amounts of UST into Terra’s Anchor protocol starting on January 21. By May 9, the amount reached 237 million UST (valued at US$237 million), although 50 million tokens were removed later that day. This means that US$187 million worth of UST was still in the Anchor protocol when the stablecoin began to crash.
• What’s Hodlnaut’s take on this?: CEO Juntao Zhu said that Hodlnaut did not take losses on Terra’s UST, though users who held the coin did. He also tweeted on June 21 that “Hodlnaut did not purchase any UST.” Zhu indicated that the wallets in question were controlled not by his company but by “counterparties,” but he said in a tweet on the same day that he could not share details because of non-disclosure agreements.
• The money trail: The first major transaction involving the Terra wallet happened on January 21, when it received 72.9 million in UST from a trading pool on Curve Finance. The pool held Magic Internet Money, an asset-backed stablecoin, as well as UST, according to research by Nansen. Over the next three months, over 317.7 million UST tokens were moved through the wallet and into the Anchor protocol.

Read more: Hodlnaut may have had $187m exposure to Terra collapse

Fasset’s Indonesia flow

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