OPNX, the newly launched crypto exchange by founders of the now-defunct Three Arrows Capital (3AC), has reportedly launched a bid to take over struggling crypto lender Hodlnaut.
If the bid is approved, the deal could see an injection of around $30 million worth of FLEX tokens into Hodlnaut.
A White Knight Investor For Hodlnaut?
According to a report in Bloomberg, the OPNX exchange has made an offer to acquire 75% of the struggling crypto lender. The bid comes at a critical time for Hodlnaut, which is undergoing a restructuring plan under the supervision of a Singapore court. The deal would see a significant capital injection into Hodlnaut and would partially cover outstanding claims and creditor payouts. If the deal is approved, creditors will receive 30% of their claims in FLEX tokens and other cryptocurrencies. This offer also gives them a direct stake in the future potential of the entity being acquired.
Alternatively, creditors also have the choice of opting for a pro-rata payment, allowing them to recover about 95% of the available corporate asset pool. According to OPNX, this option prioritizes the immediate financial recovery and stability of creditors. However, the bid is subject to approval from Hodlnaut’s creditors, who effectively hold the fate of the acquisition in their hands. The creditors’ decisions could also have a significant impact on the larger crypto-lending ecosystem.
Unclear If Deal Goes Through
So far, it remains to be seen if Hodlnaut’s creditors will accept the deal. Back in April, a significant majority of the struggling crypto lender’s creditors indicated their desire to liquidate the company. In a letter from the interim judicial manager (IJM), users representing 55.38% of creditors having claims of around 228.3 million Singaporean dollars ($170 million) have indicated that they prefer liquidation rather than restructuring. However, at the time, there was no source of fresh capital for the company.
“There appears to be no indication of a white knight investor to date, and hence no prospect of any fresh capital injection.”
Meanwhile, only users with around 2.42% of claims supported looking into the restructuring option. However, all of these claims belonged to company directors. A mediation proposal was also opposed by the major creditors of the company, including Samtrade Custodian and SAM Fintech, and the Algorand Foundation. Algorand has a $35 million exposure to Hodlnaut.
The Hodlnaut Fiasco
Hodlnaut halted all withdrawals in August 2022, as the turmoil in the crypto markets led to a significant liquidity crisis for the crypto lender. Eventually, the company entered into judicial management, temporarily protecting it against legal action. Following this, the company entered into a court-based restructuring process, shedding light on the extent of its financial difficulties. The company had stated at the time,
“We are aiming to avoid a forced liquidation of our assets as it […] will require us to sell our users’ cryptocurrencies such as BTC, ETH, and WBTC at these current depressed asset prices.”
With Hodlnaut struggling with the complexities of financial rehabilitation and creditor interests, founders Zhu Juntao and Simon Lee proposed selling the business as an alternative to liquidation, arguing it would result in a more favorable outcome for creditors. Furthermore, regulatory concerns have also compounded troubles, with figures associated with Hodlnaut and OPNX facing reprimands in Dubai for operating OPNX without the necessary local licenses.
The OPNX Exchange And Its 3AC Connection
The FLEX token is the native token of the CoinFLEX exchange, founded by Sudhu Arumugam and Mark Lamb. Arumugam and Lamb are also the co-founders of OPNX, a crypto claims trading marketplace. Other co-founders of OPNX include Kyle Davies and Su Zhu, who founded the now-bankrupt crypto hedge fund Three Arrows Capital. Creditors are pursuing both Zhu and Davies in the US over bankruptcy proceedings.
The legal team representing creditors filed a motion urging that Davies be held in contempt of court for wilfully ignoring a subpoena connected to the firm’s bankruptcy proceedings. Creditors have alleged that Davies is purposely delaying asset recovery. However, the motion does not apply to co-founder Su Zhu, who, thanks to his Singaporean nationality, is not subject to the jurisdiction of US courts.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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