Crypto Lender Hodlnaut Pauses Withdrawals As U.S. Blacklists Tornado Cash

The hits keep on coming for the crypto market as the bitcoin price tumbled back below $24,000. Crypto analyst Will Clemente suggested that bitcoin could consolidate at around $23,000 or below for multiple days, causing it to print a lower-high as it failed to reach its previous high of $24,700.

He drew attention to Coinbase's orderbook, which shows bitcoin bids stacked from $17,000 to $10,000, demonstrating significant demand from investors who want to buy the cryptocurrency at lower prices. In an email on Tuesday morning, GlobalBlock noted that the last time the crypto exchange's orderbook was skewed to the buyside in March 2020, a generational buying opportunity ensued.

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That drove the bitcoin price from $3,000 to $65,000 in a little over 12 months for a return of more than 2,000%. However, for now, crypto-related companies continue to languish amid the widespread uncertainty in the crypto market.

Treasury Blacklists Crypto-Mixing Service Tornado Cash

CoinDesk reported that the U.S. Treasury had banned Americans from using the crypto-mixing service Tornado Cash. The Office of Foreign Assets Control, a watchdog that aims to prevent violations of sanctions, added Tornado Cash to its list of Specially Designated Nationals.

That list contains all blacklisted entities, people and crypto addresses. Being added to the list means all U.S. entities and people are banned from interacting with the company or any of the Ethereum wallet addresses tied to its protocol. Those who ignore the ban could face criminal charges.

The Treasury Department said the North Korean hacker group known as the Lazarus Group has been using Tornado Cash, including in its $625 million hack of Axie Infinity's Ronin Network in March. After analyzing the applicable blockchain, officials learned that tens of millions of dollars in crypto take from Ronin flowed through Tornado Cash, which is designed to hide the source of funds.

A Treasury official described Tornado Cash as "the go-to mixer for cybercriminals looking to launder the proceeds of crime" and "helping to enable hackers… to launder the proceeds of their cybercrimes by covering up the origin and transfer of this illicit virtual currency."

Another Crypto Lender Freezes Withdrawals

Meanwhile, the lender Hodlnaut has joined the list of crypto-related companies freezing withdrawals. In a statement on Monday, the Singapore-based company cited "difficult market conditions" for the move. Hodlnaut aims to stabilize its liquidity and preserve its assets as it develops a long-term solution. The company also withdrew its application for a license in Singapore even though the Monetary Authority gave it in-principal approval earlier this year.

Hodlnaut joins a growing list of crypto lenders that have collapsed under the plummeting crypto prices this year. Voyager Digital and Celsius Network have both already filed for bankruptcy protection. The market capitalization of the global crypto market has shrunk from over $3 trillion in November to approximately $1 trillion today.

Aside from the plunging crypto prices, the collapse of crypto hedge fund Three Arrows Capital has also played a role in the bankruptcy filings of some crypto lenders. However, Hodlnaut said in June that it didn't have any "exposure or loans" with the hedge fund. The crypto lender plans to update its position on Aug. 19.