Blockwater Technologies, a South Korean blockchain investment company, defaulted 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 Binance USD (BUSD) stablecoin.
The bankruptcy of Blockwater 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 as a result of 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 extended 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.
Given the complexities surrounding the abrupt insolvency, TrueFi judged that "a potential court-supervised administrative proceeding would lead to a better outcome for stakeholders," according to a 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 Daria, head of lending at ArchBlock, which oversees relationships between lenders and borrowers on the TrueFi protocol, told CoinDesk.
According to the statement, TrueFi and Blockwater are still in "active discussion" and Blockwater's bankruptcy has no impact on the protocol's other lending pools.
By fLEXI tEAM