Crypto Lender Hodlnaut Freezes Withdrawals, Citing Market Conditions

Cryptocurrency lending platform Hodlnaut has frozen withdrawals, deposits and token swaps because of "difficult market conditions," the firm said on Monday. From a report: The Singapore-based firm, which was founded in 2019, said it wants to stabilize liquidity and preserve assets while it works on a long-term solution. Hodlnaut also withdrew its application to the Monetary Authority of Singapore for a license in the city-state, even though it received in-principle approval from the central bank in March.

The company is the latest in a line of crypto lenders that have buckled under market pressure this year, with Celsius Network and Voyager Digital both filing for bankruptcy protection. The total crypto market cap has slumped to about $1 trillion from more than $3 trillion in November. One of the key components of the market downturn was the collapse of crypto hedge fund Three Arrows Capital, which had billions of dollars of exposure to numerous companies in the crypto universe. Hodlnaut announced in June that it had "no exposure or loans" with Three Arrows Capital or Celsius.

Crypto market has stabilized

[JoeyRox]

Does that mean this company can't function in a normal market environment?

Re:Crypto market has stabilized

[Train0987]

No it means they gambled away all their customer's money.

Re:

[shanen]

Interesting FP branch, and such should be encouraged, but still... I'm always hoping for FPs that can lead deeper into the story or into the problems underlying the story...

So having said that, it seems hard to go deeper from here. The reply is implying a Ponzi scheme of some sort, which is plausible, but the deeper idea of "stability" from the FP is where I'd look for deeper meaning...

I'm trying to digest some weird ideas from a book called Shaping the Fourth Industrial Revolution by Klaus Schwab. In his

Re:

[rudy_wayne]

The pro argument is that people can trust the stability of algorithms and mathematics, even if almost none of the people involved can actually understand the code.

You can trust math. But algorithms are created by people and some people are dishonest. If you're dealing in fake money ("cryptocurrency") nearly all the people involved are dishonest.

Re:

[shanen]

That's what I was trying to say? Except I didn't get to the last part, which seems to go without saying?

But in theory they don't have to be dishonest. <Your "in practice" joke goes here.>

Re:

[jythie]

Though the bigger problem : trusting the math isn't enough, it isn't even all the math. It is one little part of a larger system, which means 'trust the math' is really just 'put faith in ignorance'.

Re:

[PPH]

You lost me at Klaus Schwab.

I don't don't doubt that the code probably does what its creator(s) claim. But the underlying assumptions about what a currency is and does were flawed.

implying a Ponzi scheme of some sort

Ponzi scheme. Fractional reserve banking. You say tomato ...

BTC was intended to have a limited money supply. But then some "smart guys" figured that they'd go into the actual banking business with it. Writing loans, options, shorts, whatever. And they broke it.

When Schwab speaks (or writes) he sounds frighteningly like a modern

Re:

[shanen]

Hmm... So you did have a strong reaction to the name. Your second reference was clarifying. Care to specify which book? Your "tonal" description sounds reasonable, but I'm not getting anything like that strong a reaction from this particular book, though I'm not saying it's been an easy read. In my second or third attempt, and only about 1/3 of the way through. And the chapter on blockchain is apparently heavily linked to Jesse McWaters and Carsten Stocker.

As regards the flavors of scarcity around Bitcoin i

Re:

[PPH]

Care to specify which book?

Stakeholder Capitalism.

so the limited number of Bitcoins doesn't even seem to be a real pretense of scarcity

Not scarcity. Stability. If you have a limited quantity of something, you can argue about what it should be worth. However, when you securitize it and start inflating its supply, nobody can be quite sure anymore. Particularly when those "Bitcoin banks" are not regulated with set capital and reserve requirements. And on the other hand, its still being advertised as having a fixed quantity.

FOMA as a motivator for cryptocurrency speculators

I think you mean FOMO (Fear Of Missing Out). Typical con game. Call now! Quantities are limited! O

Re:

[shanen]

Yes, my mistake on FOMO. And the other book you mentioned actually sounds interesting on the title. I don't have to agree if the ideas are provocative and the data is from the real world.

As regards the idea of "stability" in relation to Bitcoin (or any cryptocurrency), I'm definitely NOT seeing that in the real world. It's another gold rush, and as usual the best way to profit is by supplying the rushers with necessities. (Did you know TFG's granddad started the family fortune with the profits from a kind o

Re: Crypto market has stabilized

[gnasher719]

Wait a second⦠That Klaus Schwab is a real person? I thought he was just a weird anti-vaxxer meme.

Re:

[shanen]

Is there a citation behind that? Or perhaps someone else with or using the same name? So far nothing along such lines in the book I have here.

Re:

[rgmoore]

Therefore the real problem we are looking at here, the real sales pitch for cryptocurrency, is actually the loss of trust in governments to provide stability to the economy? Just too many greedy crooks bribing the referees?

That's a reasonable interpretation of the sales pitch for cryptocurrency, but cryptocurrency doesn't really tackle that problem. The only thing crypto can do along those lines is to keep M0 rigidly controlled, i.e. to prevent physically producing more currency. It can't control higher o

Re:

[shanen]

Basically concurrence, especially with your second problem as I think I understand your explanation. Just another flavor of the same uncontrolled-money-supply poison?

I'm still trying to digest the provocative chapter, but I've branched back to the greed topic, as in the limits thereof and with this story as another data point. Right now I'm quite skeptical that "greed is good" under any normal circumstances. Greed is fundamentally shortsighted and selfish and inclined towards damaging other people in any ze

Re:

[rgmoore]

The real problem with "greed is good" is that it assumes a social and legal system that constrains how people can express their greed. If you allow unfettered greed, people will try to satisfy their greed by cheating and stealing, since those are the easiest ways of doing so. It's only when you have a legal system that cracks down on theft and fraud that greed can be socially beneficial. This is why the "if a little greed is good, think how much better it will be if we really turn greed loose" are so wro

Re:

[shanen]

Well said.

Re:

[rgmoore]

Basically concurrence, especially with your second problem as I think I understand your explanation. Just another flavor of the same uncontrolled-money-supply poison?

I think so. Let me try to restate my point more clearly. You can't constrain the money supply by switching to private money, since people can always invent new kinds of money. You can only constrain the money supply by government policy. That means the complaints cryptocurrency supporters are making are really about the government not adoptin

Re:

[shanen]

Well said.

(Rare for me to make two such responses on Slashdot these years, but I just did.)

Re:

[radarskiy]

"people can trust the stability of algorithms and mathematics"

Mathematics is deterministic, but it can still be chaotic. It takes human judgement to notice that the chaotic response is undesirable and intervene.

"the loss of trust in governments to provide stability to the economy"

It's the systems that try to evade regulation that we are seeing destabilize. So it is a sales pitch, but a bogus one.

Re:

[shanen]

I think I concur, though your writing is terse.

Re: Crypto market has stabilized

[flyingfsck]

Not gambled - stole.

Re:

[jellomizer]

While I may not be the oldest person around, but from my few decades of experience. Markets go up, Markets go down. The businesses that survive are the ones that know that, and do actions to make sure there is reserved money and a plan for when (not if) the market goes down. If the business plan is around the marking rising all the time, then you are just following a get rich quick scheme, which often will have a get poor quick action.

Re:

[Darinbob]

I am not the oldest person, but I'm still trying. However I try to imagine a bank doing the same thing here: No withdrawals from your checking account until we get our business in line (and until we get our executives to a country without an extradition treaty). Would that fly, or would a swarm of regulators and investigators be showing up at 5am before the coffee's made to lock everything down and disable the shredders?

Re:

[jellomizer]

Bank Runs [wikipedia.org] it happened in the past. To stop them the US had to take a lot of drastic actions, if done today would spur people yelling COMMUNIST!! How dare the government try to preserve our capitalistic system!

Re:

[jythie]

Which is kinda how we ended up in the 2008 financial crisis. Regulations were put in place after problems were noticed, things stabilized, then we got a decade of 'regulation is communism, it gets in the way of massive profits!' and then deregulation, which resulted in the same problems as before.

Re:

[Opportunist]

No, it only means that it stabilized like a patient after exitus.

"Dead" is a fairly stable condition. It rarely changes.

Watching the crypto-coin implosion

[IWantMoreSpamPlease]

is the most fun I've had online in some time.

Re:Watching the crypto-coin implosion

[thegarbz]

is the most fun I've had online in some time.

Then you'll love this site: https://web3isgoinggreat.com/ [web3isgoinggreat.com] It'll be your equivalent of Disneyland.

Re:

[Opportunist]

Here's your soda, pass the popcorn.

The market has stabilzed

[Registered Coward v2]

It's condition is still dead. Seriously, is it "I'm sorry we can't let you take out your money because we're in over heads and going bankrupt and our creditors will want to be paid?"

Re:

[rudy_wayne]

It's condition is still dead.

In all fairness, dead is a very stable condition. Much like former Spanish president Francisco Franco who has remained dead since 1975.

Re:

[GoTeam]

Much like former Spanish president Francisco Franco who has remained dead since 1975.

I thought he was revived by Nazi German scientists living in Argentina back in 1983?!

Re:

[Darinbob]

Yes, but he went on a rampage and had to be taken out.

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[Registered Coward v2]

It's condition is still dead.

In all fairness, dead is a very stable condition. Much like former Spanish president Francisco Franco who has remained dead since 1975.

Exactly, I figured someone would get the SNL reference.

But they're hodlnaut

[OverlordQ]

If you're going to hodl, why do you need withdrawals.

Re:

[Train0987]

1BTC still equals 1BTC right? I don't see what the problem is either!

Re:

[bsdetector101]

But based on nothing w/o any guarantee to back it. Who you going to get it back ? Nobody !

Really??

[DarkOx]

Hodlnaut

What the hell is wrong with people? Why would name your organization after a frequent-typo in an online forum known best for attempting treat financial markets like a casino? Unless of course you were not really very serious about it succeeding, you know like a lark that might payoff. Why as a client would you park money with a firm like that?

I can sorta kinda feel bad for someone who lost big after being showing a rosy prospectus from some place like Celsius. But Hodlnaut or buying "bored apes" its like these people are say "hi you look like a complete fool" and half the damn internet responds "shut up and take my money"

Re:

[splutty]

HODL is an actual term, actually used, non ironically, by our good friend the crypto bros.

So naming something in the crypto sphere after that, is completely acceptable (to them).

basic capitalism

[Kremmy]

The market conditions aren't right for us so we're not letting you trade.
Hail Economics, fascism for the rest of us.

Translation

[rlwinm]

Translation: "We spent all your money on hookers and blow. Sorry, not sorry."

Re:

[Gravis Zero]

Translation: "We spent all your money on hookers and blow. Sorry, not sorry."

They should be sorry because with the amount of money they had, they could have groomed their own hookers and grown their own drugs. You gotta think long term!

Re:

[Darinbob]

Well, they had all their investments lined up, All there on the coffee table, lots of straight lines, evenly spaced, easy for the accountants to deal with. Then some bozo went and sneezed and they had to get the vaccuums out to try and recover their investments.

Real banks:2020s crypto banks: 1920s

[hdyoung]

Is there a single defi outfit that HASNT frozen withdrawals? These “companies” are basically like the banks during the great depression, except they’re probably failing at an even HIGHER rate. Meanwhile, modern finance is a full century ahead.

Seriously. How can anyone with a high school diploma still be a crypto bro? Do they enjoy having their money locked into an institution that wont return it and could very well go bust with zero consequence?

Re:

[GameboyRMH]

Seriously. How can anyone with a high school diploma still be a crypto bro?

Smart people can still get gambling addictions or find themselves on what they perceive as the upper part of an ever-growing Ponzi scheme.

Re:

[Darinbob]

Also, smart people are also stupid people. No one's smart at everything, and everyone has weak spots. The point of the Dunning-Krueger effect is not necessarily that people are dumb or uninformed, but that they mistakenly believe that they are above average at a particular area of knowledge when they aren't. And you can see this at any party after others have had a drink or two.

Re:

[jythie]

Smart people can also believe that they are smart enough that THIS time they will be on the winning side of the scam. A lot of these cryptobros know full well that something is a scam, but they think they have made the connections and figured out the market enough to scam OTHER people.

Re:

[jythie]

I would more describe them as being like the banks in the 1600s and 1700s, before we had central banking and even the most basic financial norms had not been established yet.... many banks, no regulation often each with their own script, it was a wild time and it seems to be what they are trying to recreate because it was 'closer to gold' and, of course, easier to run away with people's money.

Allow me to translate:

[superdave80]

we regret to inform you that we will be halting withdrawals, token swaps and deposits with immediate effect.

You guys want to withdraw, like, a hundred-thousand bitcoin. We have eight. Not eight thousand. Eight. As in one, two, three, four, five, six, seven, eight.

We have reached this difficult decision due to recent market conditions.

Our entire business plan was based on cryptocurrency increasing 50% every year. Yeah, it sounds pretty stupid even saying it out-loud now.

We would like to reassure you that this difficult decision was taken for us to focus on stabilising(sp) our liquidity and preserving assets, while we work to find the best way to protect our users’ long-term interests.

We made this decision to delay our inevitable shutdown while we wring out every dollar for ourselves to protect OUR long-term interests. I'm not sure who put the 'users' in that statement. Must have been a typo.

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.

We out-a-here, suckers...

Re:

[shanen]

Mod parent funnier and grant PhD in applied linguistics.

So that's them also shutting their doors

[Growlley]

in 2 weeks then?

A run on the bank!

[jellomizer]

2017: Yea Crypto currencies! Money without all of that nasty government regulation!
2022: Boo Crypto currencies! I can't access my money and there are not any regulations to allow me to get it!

Why can't we make money by exchanging Goods and Services and consuming less Goods and Services then we have given.

I liked the original intent of Crypto like bitcoin, when it was new. Allowing for a secure private transaction of money, allowing for micropayments transactions without all the extra transfer fee info. Ho

Re:

[fuzzyfuzzyfungus]

Bitcoin was screwed as a medium of exchange pretty much from day 1.

There's just nothing that says "hide this under your mattress rather than using it for transactions" like a would-be currency that's deflationary by design. Significant volatility and an initial steep climb from 'pure novelty' to 'actually worth something' didn't exactly help the situation from there.

The situation has theoretically improved, in that some of the more recent systems at least allow for transactions to occur at nontrivial

New rule of thumb

[SuperKendall]

Do not invest in companies with either "Hodl" or "Naut" in the name. Especially anything spelled close to Naught...

Re:

[Darinbob]

What about a DeFi company called Holdnaught? That sounds safe enough, right?

"Invested" in cocaine, hookers, and NFTs

[Comrade Ogilvy]

They sure do regret the NFTs now.

Ha ha ha!

[VeryFluffyBunny]

Ha ha ha! More idiots who are cooking the planet are going to lose their money =D It's like it's some kind of tax on the daft.

Re:

[Fly Swatter]

They are losing other people's money while accumulating more of their own. It is a zero sum game, but their clients are just now starting to realize they are the zero.