TrueFi Issues Notice of Default to Blockwater Technologies

The $3.4m loan default represents ~2% of TrueFi’s Total Value Outstanding and is currently in an active restructuring to maximize recovery for affected BUSD lenders.

On October 6th, 2022, TrueFi issued a notice of default to Korea-based Blockwater Technologies (“Blockwater”) for missing a scheduled payment due on its amended 3,419,190 BUSD loan. The TrueFi credit group led an exhaustive out-of-court workout with the principals of Blockwater, including a loan amendment to increase the borrowing rate and extend maturity, but ultimately determined a potential court-supervised administrative proceeding would lead to a better outcome for stakeholders given the complexity around the sudden insolvency.

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.

The Blockwater default does not affect lenders in TrueFi’s USDC, TUSD, USDT stablecoin lending pools, nor any of TrueFi’s capital market portfolios.

As TrueFi remains in active discussion with Blockwater and its advisors, the credit group will be focused on maximizing recovery on behalf of the lenders and stakeholders. To date, Blockwater has completed 8 payments totalling $645,405 towards loan repayment. $2,967,458 remains due at the time of the default. Further updates will be provided to the TrueFi community and any action required by TrueFi DAO will be subject to tokenholder vote and approval.

Updates will be provided via TrueFi Twitter @TrueFiDAO

To date, TrueFi has originated over $1.7 billion in unsecured loans and successfully collected approximately $1.5 billion in repayments across 136 loans, generating $34.34 million in interest for lenders.

As of writing, TrueFi is facilitating nearly $140 million of active lending across 10 loans. The TrueFi credit group believes that the loan book continues to remain in strong standing and has been actively pursuing loan renewals given continuing borrower demand and support from major lenders.

TrueFi offers lenders certain contemplated protections against default in the form of the TrueFi SAFU, which oversees a fund explicitly dedicated to assisting those affected by defaults, and staked TRU slashing, which may appropriate up to 10% of staked TRU for the benefit of lenders affected by a default, under the direction of the DAO. Invoking these mechanics, as well as collection actions against the borrower, will be thoroughly discussed on the TrueFi forum.

Despite market conditions, borrower demand remains high and continues to outpace available capital. With a traditional and rigorous approach to underwriting, TrueFi’s loan book remains healthy and active across both crypto-native and real world lending.

As TrueFi continues to pursue renewals with existing borrowers, vet and onboard new borrowers and portfolio managers, and tap new sources of liquidity in both DeFi (such as MakerDAO and FRAX) and traditional markets alike, we believe the protocol remains in a strong position to thrive.