Maple Finance, one of the largest unsecured credit platforms, said it decided to severe ties with crypto firm Orthogonal Trading, alleging that the firm was “misrepresenting its financial position” and its ability to repay a loan from the protocol.
Orthogonal was due to pay back a $10 million USDC stablecoin loan from a credit pool managed by M11 Credit on Dec. 4, according to a Maple credit dashboard. The firm has been a significant borrower on Maple, and also was a manager and underwriter of a credit pool on Maple.
Maple said that the firm has been “operating while effectively insolvent,” and did not communicate that it would be unable to service its debt.
“Misrepresentation like this is in violation of Maple’s agreements and all appropriate legal avenues to recover funds will be pursued including arbitration or litigation as necessary,” according to the statement.
Orthogonal Trading’s default and insolvency is another blow to crypto lending and unsecured credit protocols, dealing with the fallout of crypto exchange FTX’s implosion.
Maple Finance and M11 Credit was already dealing with another borrower, embattled market maker Auros Global’s failed repayment of a loan.
An email from CoinDesk requesting comment from Orthogonal Trading wasn’t immediately returned.
