Company cites cost-cutting as the reason and says the remaining 20 percent would play a vital role in recovery. Hodlnaut held $187 million in TerraUSD, and its problems started when it crashed to zero in May, leading to significant losses, reports say.
The company, which applied for a form of creditor protection last week, did not reveal further details about the police proceedings.
Joins a long list of crypto firms halting withdrawals and trading.
Hodlnaut said the move was "due to recent market conditions"