The latest firm to freeze crypto withdrawals is engaged in “proceedings” with Singaporean police.

Singaporean crypto lender Hodlnaut disclosed massive layoffs and pending “police proceedings” in a Friday blog post that underscored the dire financial and legal straits faced by the latest firm to freeze crypto withdrawals.

Hodlnaut said in the blog that it fired 40 people (80% of headcount) and slashed interest rates to 0% APR in an attempt to “stabilize our liquidity” and cut costs. Its founders are “working hard on a recovery plan” and remain in Singapore.

The interest-paying crypto swap shop said it is engaged in “proceedings” with Singaporean authorities. Its blog was mum on the details but characterized the proceedings as in users’ best interest. Hodlnaut froze those users’ assets in early August; it is now seeking protection from its creditors.

Hodlnaut is one of the many crypto firms to stumble under cratering market conditions and imploding companies, alongside Three Arrows Capital, Voyager Digital and Celsius Network. In the blog post, Hodlnaut pointed the finger at “losses suffered” from TerraUSD’s crash.

A Singapore court will hear Hodlnaut’s legal protection plea on Aug. 22, 2022. The court may appoint an interim judicial manager to oversee the company’s financials in place of its current directors.

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The move comes after UST briefly lost its peg to the U.S dollar over the weekend.

Luna Foundation Guard (LFG) will lend $1.5 billion in bitcoin (BTC) and TerraUSD (UST) to defend the peg of its algorithmic stablecoin to the U.S. dollar.

In a tweet thread, the Singapore-based LFG said it would loan $750 million worth of BTC to trading firms to help protect the peg and also loan $750 million in UST to accumulate bitcoin to help normalize the market.

“The traders will trade the capital on both sides of the market to help accomplish both #1 and #2, eventually maintaining parity of the LFG Reserve pool (denominated in BTC) as market conditions progressively stabilize,” LFG wrote in the thread.

UST relies on another token, LUNA, to keep its price of a dollar via a set of on-chain mint and burn mechanisms and is one of the largest algorithmic stablecoin.

In a separate tweet thread, Do Kwon, the project’s founder, said that the move to loan out $750 million of bitcoin shouldn’t be seen as LFG trying to exit its BTC position but rather increasing the liquidity around the UST peg. LFG will buy more BTC if UST expands from here, which we think is the more likely outcome,” Kwon said.

Over the weekend, the UST briefly lost its peg to the U.S. dollar, falling to $0.987 before climbing back to $1. At the same time, LUNA dropped 10%.

Part of the reason why UST briefly broke its peg was the large quantities of UST that were withdrawn from liquidity pools on decentralized exchange Curve, while $192 million of UST was dumped.

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