Crypto Investment Firm Blockwater Technologies Fails to Pay DeFi Loan
TrueFi sends Blockwater Technologies a notice of default after the latter failed to pay its remaining debt of $3 million.
Editing by Nathaniel Cajuday
Decentralized lending protocol TrueFi has recently issued a “notice of default” to South Korean crypto investment firm Blockwater Technologies after it failed to make a payment on a $3.4 million loan in Binance USD (BUSD) stablecoin.
According to TrueFi’s statement, “a potential court-supervised administrative proceeding would lead to a better outcome for stakeholders given the complexity around the sudden insolvency.”
“While we always prefer to pursue an out-of-court solution with distressed borrowers, in some instances an administrative proceeding is the best option in preserving value for stakeholders,” said Roshan Daria, head of lending at ArchBlock, which manages relationships between lenders and borrowers on the TrueFi protocol.
This came after the two firms restructured the loan and extended the payment period in August, where Blockwater managed to repay $654,000 of its outstanding debt. However it still eventually missed payment.
The remaining debt amounts to almost $3 million.
The default of Blockwater is seen as one of the results of the still ongoing crypto winter as well as an example of the crypto industry’s insolvency crisis. Beginning with the collapse of Terra’s algorithmic stablecoin USDT, the largest stablecoin by market cap, and its crypto, LUNA, last May, big crypto companies filed bankruptcy such as hedge fund Three Arrows Capital (3AC), and crypto lender Celsius Network.
Currently, TrueFi and Blokwater remained in “active discussion,” and said that Blockwater’s insolvency does not affect the protocol’s other lending pools.
Accordingly, along with the bear market in crypto, the non-fungible tokens (NFT) market has also suffered losses as its market trading volume has crashed by 97% in 9 months. The NFT space value went down from $17 billion in January 2022 to $466 million in September. (Read more: NFT Market Volume Drops 97 Percent From 2022 Highs)
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