Crypto Winter at $3M – Blockwater in Default

New slap in the face for DeFi? The crypto lending platform TrueFi (TRU) must manage the financial difficulties of one of its debtors, Blockwater. He took out a loan of several million dollars in Binance USD (BUSD).

Crypto loans: TrueFi facing a Blockwater in default of payment

In a ticket blog post on October 6, TrueFi announced the issuance ofa notice of default against the South Korean investment company Blockwater. The latter missed a deadline on its BUSD loan amounting to approximately $3.4 million.

TrueFi is a lending platform that allows crypto businesses, to take out unsecured credit. Platform users can lend to wallets that TrueFi DAO manages. Borrowers and loans are analyzed. They must obtain the approval of the stakers of TRU tokens, the native cryptocurrency of the platform.

Blockwater would have already reimbursed $645,405 in eight payments on this credit. However, he still has to pay $2,967,458 at the time of default.

TrueFi had previously negotiated out of court with Blockwater executives. The borrower apparently encounters some difficulties in honoring its commitments for several months. The discussions focused in particular on an increase in the borrowing rate, accompanied by an extension of the maturity.

The initial term of the loan was indeed 90 days. Closing was then scheduled for the first week of August of this year. TrueFi has granted an extension, with a deadline pushed back to October, with a weekly payment schedule.

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Non-confrontational legal process and insolvency without major consequences?

The umpteenth default seems to have changed the situation. The credit platform would have finally decided to possibly resort to an administrative procedure under court oversight. She evokes the complexity of the sudden insolvency of Blockwater, to justify the merits of such an approach.

Although TrueFi raised this procedure, the company would continue to discuss with Blockwater to maximize the recovery of the debt. The opinions of TRU token holders would be sought, if TrueFi DAO were to take specific measures in this context.

Like most of the crisis press releases that have been published by other crypto companies during these bear markets, the TrueFi post is intended, unsurprisingly, to be reassuring by minimizing the impact of this default on its situation. financial.

This insolvency, temporary or permanent, of Blockwater would not affect ” lenders from TrueFi’s USDC, TUSD, USDT stablecoin lending pools “. The platform’s capital market portfolios would also not have to fear any jolts as a result of this event.

the bear market will have revealed the weakness of certain cryptocurrency lending platforms. Does TrueFi have a strong enough safety net in place to deal with this type of situation? Or is the cryptosphere about to witness another Celsius-like scenario, which puts its customers through an ordeal?

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John R. Zepeda

I have extensive experience working as a content writer in the areas of cryptocurrencies and finance, where I create interesting pieces that both inform and engage their audiences.

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