The Breaking Point
On December 5, Maple Finance took a decisive step by severing all links with Orthogonal Trading, following a series of troubling revelations regarding the latter’s financial practices. The red flags were raised when it became clear that Orthogonal Trading had been less than honest about its financial health.
Why the Fallout?
The main issue arose after Orthogonal Trading failed to meet loan repayments. Over a period of four weeks, they misrepresented their financial situation and only came clean about their insolvency on December 3. Maple Finance made it clear that operating under such circumstances is not just unethical; it violates their agreements.
Maple Finance’s Stance
Maple Finance is taking a strong stance against what it terms “bad actors” in the crypto space. In a direct quote released by the company:
“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.”
Impact on Lenders
Despite the turmoil surrounding Orthogonal Trading, Maple Finance reassured its lenders that their investments are protected. The smart contracts still in place will safely guard the assets in the Orthogonal Credit pool. With no current signs of distress in any active loans, the company anticipates a smooth sailing ahead for the time being.
The Role of Orthogonal Credit
It’s important to note that Orthogonal Credit, a separate entity from the troubled trading arm, is handling its operations in a more professional manner. Maple Finance commented positively on the Orthogonal Credit team’s integrity, stating they are actively seeking strategic solutions as an independent entity. Well, at least someone’s keeping it together!
The Ripple Effect
The story doesn’t end here. The fallout from the FTX collapse seems to have cast a long shadow over the cryptocurrency community, with players scrambling to reassess their partnerships and financial practices. Just last month, Orthogonal Credit had to shut down a borrower pool associated with Alameda Research due to serious risks identified in their due diligence. Such events only add to the heightened scrutiny faced by companies in this volatile landscape.
