Blockwater Technologies, a South Korean blockchain investment company, missed payments on a loan from TrueFi, a decentralized lending platform, according to a statement released by TrueFi on Sunday.
The declaration claims that TrueFi gave Blockwater a “notice of default” on October 6 after it defaulted on a $3.4 million loan in stablecoin (BUSD).
Given the complexity surrounding the sudden insolvency, the TrueFi credit group conducted a thorough out-of-court workout with the Blockwater principals, along with a loan amendment to raise the borrowing rate and extend maturity. However, it was ultimately decided that a prospective court-supervised administrative court action would result in a better outcome for stakeholders.
Blockwater’s default highlights the effect of the bear market
The bankruptcy of the firm appears to be the most recent illustration of the insolvency issue in the crypto sector.
Numerous well-known cryptocurrency companies, including the hedge fund Three Arrows Capital (3AC), the cryptocurrency lender Celsius Network, the digital asset broker Voyager Digital, and the operator of crypto-mining data centers Compute North, have filed for bankruptcy. This is due to the sharp decline in the market this year, which was made worse by the collapse of the Terra blockchain.
After TrueFi and Blockwater modified the loan and prolonged the payment period in August, Blockwater went into default on its obligations. After the restructuring attempts, Blockwater was able to pay off $654,000 of its outstanding debt; nonetheless, payments were eventually late. There is still approximately $3 million in debt.
TrueFi has so far made unsecured loans totaling more than $1.7 billion, successfully recovered repayments totaling around $1.5 billion across 136 loans, and generated interest payments to lenders in the amount of $34.34 million.
As of this writing, TrueFi is enabling 10 loans totaling almost $140 million in active lending. Given the continued demand from borrowers and backing from significant lenders, the TrueFi credit group feels that the loan book is still in good condition and has been aggressively seeking loan renewals.
“With a traditional and rigorous approach to underwriting, TrueFi’s loan book remains healthy and active across both crypto-native and real-world lending.”
According to the statement, TrueFi and Blockwater are still in “active communication” and Blockwater’s bankruptcy has no impact on the protocol’s other loan pools.
