Thursday, December 8, 2022

Blockwater Defaults on $3.4M Loan from TrueFi

Another insolvency case has joined the long list which has been growing since the crash of the Terra ecosystem. An Asian blockchain investment firm Blockwater Technologies has defaulted on a loan that it received from the decentralized lending protocol TrueFi. The protocol announced this after it issued a ‘notice of default’ to the South Korean firm last week.

Blockwater Technologies failed to repay the $3.4 million loan in Binance USD (BUSD) stablecoin which it received from TrueFi. Initially, Blockwater had missed a payment schedule after which TrueFi issued the notice. The lender had tried to make the settlement an out-of-court process by adjusting the loan terms of the agreement.

Principals from both firms agreed to restructure and amend the loan by increasing the borrowing rate and extending maturity. So far, Blockwater Technologies has only paid $645,405 in 8 payment rolls. This leaves the firm with $2,967,458 as the remaining loan to be paid to TrueFi. 

TrueFi Chooses a More Legal Approach For Blockwater

However, the lending protocol has determined that “a potential court-supervised administrative proceeding would lead to a better outcome for stakeholders given the complexity around the sudden insolvency.” 

Roshan Dharia, head of lending at ArchBlock also commented on the intended approach of TrueFi.  “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,” Dharia said

Meanwhile, ArchBlock is the firm which manages relationships between lenders and borrowers on the TrueFi protocol. While TrueFi remains in active discussions with Blockwater Technologies, its credit group will focus on maximizing recovery on behalf of the lenders and stakeholders.

Several other crypto firms have faced insolvency this year. A few of them ended up filing for bankruptcy and are currently undergoing their restructuring process. Bitcoin mining firm Compute North is one of such firms that filed for a Chapter 11 bankruptcy with a U.S court. It ended up receiving a first-day motion to continue a few of the firm’s operations.  

Also, crypto lender Celsius Network filed for a Chapter 11 bankruptcy with the Southern District of New York Bankruptcy court.

 

Victoria Nye
A Blockchain columnist who is enthusiastic about developing a network interface between the real world and the cryptosphere.

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