The South Korea-based crypto investment firm Blockwater Technologies has defaulted on a $3.4 million loan for TrueFi, a decentralized lending protocol.
South Korean blockchain investment firm Blockwater Technologies has defaulted on a loan from TrueFi, a decentralized lending protocol, TrueFi said in a statement Sunday.
According to the statement, TrueFi issued a “notice of default” to Blockwater on October 6 after failing to repay a $3.4 million loan in stablecoin Binance USD (BUSD).
Blockwater’s default appears to be the latest example of the crypto industry’s insolvency crisis. The sharp downturn of the crypto market this year, exacerbated by the collapse of the Terra blockchain, has resulted in the bankruptcy of many well-known crypto companies, such as hedge fund Three Arrows. Capital (3AC), crypto lender Celsius Network, digital asset broker Voyager Digital and crypto mining data center operator Compute North.
Blockwater defaulted on its debt after TrueFi and Blockwater restructured the loan and extended the payment term in August. Blockwater managed to pay off $654,000 of its outstanding debt following restructuring efforts structure, but in the end still failed to pay. The remaining debt amounted to nearly $3 million.
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TrueFi determined that “a potential court-supervised administrative proceeding would result in a better outcome for the parties involved given the complexities surrounding sudden insolvency,” according to the statement. father of the lending protocol.
“While we always prefer to pursue an out-of-court solution with distressed borrowers, in some cases administrative proceedings are the best option to maintain value for the parties involved, ” Roshan Daria, head of lending at ArchBlock, which manages the relationship between lenders and borrowers on the TrueFi protocol, told CoinDesk.
TrueFi remains in “active discussions” with Blockwater and says that Blockwater’s insolvency does not affect the protocol’s other lending pools, according to the statement.
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