Invictus Capital Unable to Payback TrueFi Loan—Another Terra Collapse Victim

Terra (LUNA) network witnessed a collapse in May this year and spread ripple effects across the entire crypto market—which was already facing headwinds. Many companies within crypto space or having crypto exposure witnessed troubles after the instance. The aftereffects still shaking up the crypto space—Invictus Capital likely to be another example.

Recently the loan data dashboard of TrueFi highlighted the embattling hedge fund Invictus Capital defaulting on repaying the loan from a decentralized finance platform. Invictus owed 1 million worth Binance USD (BUSD) loan of TruFi which was meant to mature by October end.

The complexity of the issue is the debt was not collateralized against any asset—TrueFi gave out the loan only on the basis of Invictus’s reputation and financials.

In a Twitter post in October 2022, the decentralized lending platform put up a warning for investors giving signals of Invictus falling to payback the loan. Cayman Islands based parent company of Invictus, New World Holdings, was also said to face voluntary liquidation. This came in the wake of the Terra ecosystem’s explosion which drowned billions of dollars worth investors’ money including Invictus’ parent company.

Several reports noted Invictus had investments in UST stablecoin of Terra network—ended up collapsing after depegging from USD. Worse, it had investments in prominent crypto lending firm Celsius Network which went on to file for bankruptcy given the Terra collapse.

According to TrueFi, the company has not issued any default notice to Invictus by now. It was the only time when the latter defaulted on its loan where it had repaid 28.8 million USD worth loan amount in the past two years.

Earlier this month, Blockwater also reported to fail in repaying its 3 million USD worth loan to TrueFi. Leading South Korean asset management firm also took an uncollateralized loan from lending protocol.

Maple Finance, a decentralized lending protocol, was also reported to go through the same when another crypto lending firm Babel Finance defaulted on its loan of 10 million USD while going insolvent. The former had to face a loss given the defaulted loan amount which made the company to make its lending regulations more stringent.

Broder crypto market is already facing headwinds and a heavy downturn. The default on loans makes things worse for already suffering crypto firms. Although these instances resulted in unveiling the hidden risks and challenges behind allocating the loans without security.

The uncollateralized loan distribution across the traditional markets becomes a concern for the volatile assets market like crypto, which is in its infancy.