Crypto Investment Firm Blockwater Technologies Defaults on DeFi Loan

The South Korea-based crypto investment firm failed to make a payment on a $3.4 million loan to TrueFi, a decentralized lending protocol.

AccessTimeIconOct 10, 2022 at 3:33 a.m. UTC
Updated Oct 10, 2022 at 6:40 p.m. UTC

Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.

South Korean blockchain investment firm Blockwater Technologies 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 Oct. 6 after it failed payment on a $3.4 million loan in Binance USD (BUSD) stablecoin.

Blockwater’s default seems to be the latest example of the crypto industry’s insolvency crisis. This year’s dramatic downturn of crypto markets, exacerbated by the implosion of the Terra blockchain, has led to the bankruptcy of multiple high-profile crypto firms, 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’s default on its debt came after TrueFi and Blockwater restructured the loan and extended the payment period in August. Blockwater managed to repay $654,000 of its outstanding debt after the restructuring efforts, but eventually missed payment. The remaining debt amounts to almost $3 million.

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

“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,” Roshan Dharia, head of lending at ArchBlock, which manages relationships between lenders and borrowers on the TrueFi protocol, told CoinDesk.

TrueFi remained in “active discussion” with Blockwater, and said that Blockwater’s insolvency does not affect the protocol’s other lending pools, per the statement.


DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.

CoinDesk - Unknown

Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.