No hypothecate does not mean that. Hypothecating a bond means using the bond as collateral to secure money, once you do so it is no longer your bond owned free and clear of an encumbrances. Simply in securing money you have created a liability, which rufus also failed to disclose.
This is the claim made in the 10k, it is a lie. If rufus has hypothecated these bonds he lied, no questions asked, no doubt about it.