The Algorand Foundation has disclosed a hole in its financial sheet with a value of $35 million USDC as a consequence of the company’s exposure to the troubled cryptocurrency lending service Hodlnaut, which halted withdraws early last month.
The foundation said in a statement that was published on the foundation’s website during the weekend that the funds comprised below 3% of its total assets and that it did not anticipate any operational or liquidity concerns to occur as a consequence of the exposure.
Algorand provided an explanation as to why it invested funds in Hodlnaut, stating that as part of its mission, the foundation invests a portion of its surplus treasury capital to generate yield for the purpose of Algorand ecosystem development and that these funds were invested for the purpose of fulfilling that mission.
Algorand said:
As part of the Foundation’s mission, from time to time, we invest a portion of our surplus treasury capital to generate yield for the purpose of Algorand ecosystem development, and these funds were invested for that purpose.
A series of liquidity issues have caused Hodlnaut to prohibit withdrawals for customers (on August 8), lay off 80 percent of its workforce, and apply for judicial management (on August 19), all in the midst of an ongoing crisis.
Since the devastating collapse of the Terra ecosystem, the company has experienced significant financial setbacks. Anchor Protocol now contains $317 million TerraUSD (UST) that was buried by Hodlnaut. The statement from Hodlnaut claims that the company lost $189.7 million because UST became severely depegged from the $1 peg in the month of May.
