Singapore Crypto Lender Hodlnaut's Founders Propose Selling Business Rather Than Liquidating Firm

Suvashree Ghosh, Bloomberg News

Lights illuminate power connector cables inside a 'mining rig' computer, used to mine the Electroneum cryptocurrency, in Budapest, Hungary, on Wednesday, Jan. 31, 2018. Cryptocurrencies are not living up to their comparisons with gold as a store of value, tumbling Monday as an equities sell-off in Asia extended the biggest rout in global stocks in two years. Photographer: Akos Stiller/Bloomberg , Bloomberg

(Bloomberg) -- The founders of Singapore-based crypto lender Hodlnaut Pte proposed selling the business as a better option for creditors than liquidating the embattled firm.

Simon Lee said in an affidavit seen by Bloomberg News that he and Hodlnaut’s other co-founder Zhu Juntao have reached out to a number of “potential white knight investors.”

Lee said the co-founders believe the “Hodlnaut user base can be acquired and on-boarded on digital-asset platforms owned or affiliated to such investors.” He argued this would “maximize” value for creditors.

The company didn’t immediately respond to an email seeking comment on the co-founders’ proposal.

Hodlnaut, which also has operations in Hong Kong, halted withdrawals in August and was granted protection from creditors. It was one of a number of crypto lenders worldwide that hit trouble in last year’s digital-asset rout.

Key Hodlnaut creditors in January said their interests are best served by winding the firm up. Hodlnaut had downplayed its exposure to crypto fugitive Do Kwon’s collapsed Terra digital-token ecosystem but in reality suffered a near-$190 million loss.