The crypto lender also withdrew its application for a digital token payment license that was in-principle approved in March.

Singapore-based crypto lender Hodlnaut has frozen withdrawals, swaps and deposits following an apparent liquidity crunch it attributed to “recent market conditions” and an intention to “focus on stabilising our liquidity and preserving assets.”

The development follows a string of failures amidst a “crypto winter” of declining prices of digital assets after touching a high in November 2021. In May, the Luna and TerraUSD tokens spectacularly imploded, inflicting losses of billions of dollars on investors.

Another Singapore crypto hedge fund, Three Arrows Capital, was forced into liquidation in July after it was unable to meet its commitments to lenders.

Also last month, crypto lenders Celsius Network and Voyager Digital entered bankruptcy proceedings, after initially freezing withdrawals.

However, Hodlnaut had confirmed in June that it had “no exposure or loans” with Three Arrows Capital or Celsius.

Licence application MAS

“We would also like to inform our users that, as a result of the above reasons, we have since informed the MAS of our intention to withdraw our licence application,” Hodlnaut said in its announcement. “Hodlnaut is therefore no longer providing regulated digital payment token (DPT) services, i.e. our token swap feature. For the avoidance of doubt, Hodlnaut will also cease all borrowing and lending services.”

In a clarificatory remark, MAS said digital payment token service providers such as Hodlnaut were regulated for money laundering and terrorism financing risks as well as technology risks to be eligible for their licence.

“They are not subject to risk-based capital or liquidity requirements, nor are they required to safeguard customer monies or digital tokens from insolvency risk,” a MAS spokesman said.

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