TrueFi issues notice of default to VC firm Blockwater on $3.4M loan

Unsecured lending protocol TrueFi has issued a notice of default to Blockwater Technologies for failing to repay a $3.4 million loan agreement.

According to Blockwater’s borrower profile, the venture capital firm borrowed about $16.8 million from TrueFi in 2021. It repaid up to $13.4 million before seeking loan restructuring in August 2022.

As a result, TrueFi agreed to extend Blockwater’s loan repayment beyond August. Since then, Blockwater has been able to repay only $645,405 of the outstanding debt and failed to repay about $2.9 million on the scheduled date.

TrueFi is in discussion with Blockwater and its advisors to recover the remaining funds but will also engage in legal proceedings to ensure best outcome for shareholders. The company said:

“A potential court-supervised administrative proceedings would lead to a better outcome for stakeholders given the complexity around the sudden insolvency.”

TrueFi added that Blockwater’s loan default does not affect other lending pools under its management.  So far, TrueFi has issued about $1.7 billion in loans and collected approximately $1.5 billion in repayments.

TrueFi’s growing list of outstanding loans

Blockwater’s $3.4 million loan default accounts for just 2% of TrueFi’s total outstanding loans.

TrueFi $BUSD Pool Update:

TrueFi issued a notice of default to Blockwater for non-payment on its $3.4m restructured loan

NWH/Invictus entered a Cayman voluntary liquidation proceeding and may not repay its $1.0m loan due 10/30

Bastion has repaid its $10m loan due 10/4 in full

— TrueFi (@TrueFiDAO) October 9, 2022

TrueFi may risk not recovering some $1 million owed by Invictus Capital, which recently filed for bankruptcy.

TrueFi also has exposure to the recently hacked Wintermute — which owes about $92 million out of $275.6 million it borrowed.

Amid concerns that more borrowers may default on their loans due to bear market contagion, TrueFi said it is offering lenders full protection through the TrueFi SAFU.

All bad debt will be transferred to the SAFU smart contract, which repays lenders in TrustToken (TRU) while slashing up to 10% of the borrower’s staked TRU tokens.