Many people use centralized crypto custodians to store assets or earn yield. Unfortunately, centralized custodial platforms provide zero transparency and can expose your crypto assets to untold risks–a lesson Hodlnaut users learned in August 2022.
Hodlnaut announced that they had halted withdrawals for all users on 8 August 2022. The custodian indicated it had roughly 31 cents for every dollar they owed account holders. Those with money stuck on Hodlnaut must wait for a resolution to be reached within the courts–except those who protected themselves with Custody Cover from Nexus Mutual.
After withdrawals were halted for more than 90 days, members filed their claims and provided proof of loss. Claims assessors reviewed each claim, verified the total loss, and voted to approve $1.09m in claims.
For those without cover, it’s unclear when they will receive any settlement from the Hodlnaut proceedings. The majority of Hodlnaut’s losses resulted from the $317m in UST, an algorithmic stablecoin on the Terra network, that evaporated in May when the algo-stablecoin depegged and lost 98% of its value.
Instead of wondering how many years it will take for financial relief and how much money they will recover, members who protected their deposit with Custody Cover from Nexus Mutual received the first-ever on-chain payouts for a custodial loss event.
After his claim was paid, one of our members shared how relieved he was: “Thanks so much for your help. I got my claim paid out, such a stress relief. What a fantastic product, will continue to use and recommend.”