In a significant development, The Algorand Foundation said it has incurred a $35 million USDC loss on its balance sheet on account of its exposure to troubled crypto lending firm Hodlnaut.
The announcement was made on the Algorand Foundation website on 9 September and further broadcasted on Twitter. The revelation by the two-tiered blockchain protocol shows that the impact of the Terra Luna crash is still felt across the crypto space.
But first, a quick recap of the developments for perspective. Hodlnaut’s financial situation turned sour when its $300 million investment in TerraUSD (UST) on the Anchor protocol lost most of its value. This resulted from UST’s de-pegging and the LUNA token’s collapse. The Singapore-based lending firm was forced to stop withdrawals and suspend trading in the face of an acute liquidity crisis.
And how does Algorand come into the picture? The blockchain protocol invested $35 million USDC in Hodlnaut. Most of the investment consisted of locked-in, short-term deposits that became inaccessible following Hodlnaut’s suspension of withdrawals. However, Algorand is “pursuing all legal remedies to maximize asset recovery,” according to the announcement from the Foundation.
Foundation reassures community
The Algorand Foundation is a community-based non-profit organization dedicated to fostering the Algorand ecosystem. Amid the crisis, the Foundation sought to reassure its community, underlining the fact the funds invested in Hodlnaut were surplus to its day-to-day requirements and represent less than 3% of the Foundation’s total value. It was also clarified that the loss would not lead to operational or liquidity issues.
