DeFi Lending Platform TrueFi Announces First Default on BUSD Loan

TrueFi announced the first default on its $3.4 million BUSD loan from Blockwater Associates today, vowing to take the matter to court.

On October 10, the decentralized finance (DeFi) lending platform TrueFi issued a notice of default to Blockwater Technologies for failing to make a scheduled payment on its $3.4 million BUSD loan. In the past week, the TrueFi credit group had been trying to reach an out-of-court settlement with Blockwater, which would have entailed increasing the borrowing rate and extending maturity.

However, they found that a court-supervised administrative proceeding could provide a more favorable outcome for stakeholders. This is TrueFi’s first and only declared credit default to date. The credit group said it remains vigilant and proactive in current macro conditions.

Many lending platforms have shut down this year because investors has been pulling their money out of cryptocurrency. In the second quarter, there were mass withdrawals which led to the collapse of companies such as Celsius Networks and Voyager Digital.

TrueFi noted that it would stay in talks with Blockwater Technologies’ associates. The goal is to obtain the most optimal outcome for lenders and stakeholders alike. As stated in the official announcement from TrueFi:

“Blockwater has completed 8 payments totalling $645,405 towards loan repayment. $2,967,458 remains due at the time of the default. The Blockwater default does not affect lenders in TrueFi’s USDC, TUSD, USDT stablecoin lending pools, nor any of TrueFi’s capital market portfolios.”

To date, TrueFi has originated $1.7 billion in unsecured loans and have so far collected full repayment on all 136 outstanding loans, amounting to $1.5 billion. In total, these Repayments have generated over $34 million in interest for the lenders.

The TrueFi group said that its loan book is holding up well and they have been actively working to renew loans. Furthermore, they also offer lenders certain protections against default under the TrueFi SAFU program. The TrueFiSAFU oversees a fund specifically set aside to help lenders who are affected by defaults.

Additionally, they offer a staked TRU slashing service “which could appropriate up to 10% of the staked TRU for the benefit of lenders who are affected by a default. This is all under the direction of the DAO.”