Blockchain investment firm Blockwater Technologies defaults on DeFi loan
TrueFi says that South Korean firm Blockwater Technologies still owes it $2,967,458
The blockchain investment company Blockwater Technologies has been issued with a default notice from the decentralised finance (DeFi) project TrueFi for missing a scheduled loan repayment.
Blockwater defaults on loan despite restructuring
In a statement, TrueFi said that on 6 October South Korean firm Blockwater Technologies failed to make a payment on a $3.4m (£3m) Binance USD (BUSD) loan. BUSD is a dollar-pegged stablecoin issued by Paxos and the cryptocurrency exchange Binance.
The lender said that Blockwater has completed eight payments totalling $645,405, but still owes $2,967,458.
TrueFi had restructured the loan after what it described as “an exhaustive out-of-court workout with the principals of Blockwater”. Ultimately, it decided that “a potential court-supervised administrative proceeding would lead to a better outcome for stakeholders given the complexity around the sudden insolvency.”
The company added: “While this represents TrueFi’s only declared default to date, the credit group continues to remain vigilant and proactive with existing borrowers to ensure that reporting and compliance requests are being promptly met, given the challenging market conditions.”
Crypto asset market turmoil
Blockwater Technology is the latest in a succession of defaults that have occurred after the onset of the so-called crypto winter earlier this year. Having enjoyed substantial momentum in 2020 and 2021, the crypto asset sector has struggled in 2022.
By noon on Monday, the capitalisation of the total cryptocurrency market stood at $940bn, having started the year at $2.18trn, according to CoinMarketCap.
The reversal in fortunes has largely been attributed to the shifting macroeconomic landscape in which central banks have ended their Covid-19 era support and raised interest rates in order to tackle inflation.
The substantial decline in valuations has led to the collapses of a number of prominent projects, including the Terra blockchain, the crypto-focused hedge fund Three Arrows Capital and the crypto lenders Voyager Digital and Celsius Network (CEL).
As of earlier on 10 October 2022, TrueFi’s token TRU was trading at $0.049, down by 3.4% over the past 24 hours. It had opened the year at $0.315.