The ongoing bear market appears to have claimed another victim.
Decentralized finance (DeFi) project TrueFi said it has issued a default notice to South Korean venture firm Blockwater Technologies for missing a scheduled payment on its $3.4 million Binance USD (BUSD) loan.
BUSD is a dollar-pegged stablecoin issued by crypto exchange Binance and Paxos.
TrueFi is a lending and borrowing protocol that lets users take out uncollateralized loans, a unique feature in the world of crypto.
Most loans in the industry are overcollaterlized, meaning users must put up more than 100% of the capital they want to borrow.
TrueFi $BUSD Pool Update:
TrueFi issued a notice of default to Blockwater for non-payment on its $3.4m restructured loan
NWH/Invictus entered a Cayman voluntary liquidation proceeding and may not repay its $1.0m loan due 10/30
Bastion has repaid its $10m loan due 10/4 in full
— TrueFi (@TrueFiDAO) October 9, 2022
The platform’s loans are offered following a rigorous KYC onboarding process and a credit review, much like traditional financial institutions. Alameda Research, Sam Bankman-Fried’s trading firm, is another notable company that has used TrueFi to borrow funds.
Though TrueFi and Blockwater principals began an “exhaustive out-of-court workout” to rectify the default, the DeFi platform ultimately opted for a “court-supervised” administration.
It said that this option “would lead to a better outcome for stakeholders,” according to a blog post.
Blockwater default joins bear market victims
Blockwater’s default is the latest example of crypto firms that have defaulted on loans—or, worse, filed for bankruptcy.
The most notable bankruptcy has so far been that of crypto lender Celsius. The firm, which previously offered double-digit interest rates on various cryptocurrencies, filed for Chapter 11 bankruptcy in July this year.
As part of the court proceedings, it was also recently revealed that the firm’s former CEO Alex Mashinksy withdrew $10 million from the company’s accounts prior to freezing users’ funds.
This information was gathered via a staggering 14,500-page-long court document which also included key identifying information of every user that had ever interacted with Celsius.
Stay on top of crypto news, get daily updates in your inbox.