Maple Finance cuts ties with Orthogonal Trading

Key points:

• Maple Finance has divested from crypto firm Orthogonal Trading.
• Orthogonal was scheduled to repay a $10 million USDC stablecoin loan on Dec. 4 from a loan pool managed by M11 Credit.
• M11 Credit has issued notices of default to Orthogonal for all active loans in Maple’s USDC stablecoin pool, four of which have $31 million in outstanding debt.
• Orthogonal’s default could be another blow to crypto lending and unsecured lending protocols.

Maple Finance, a major blockchain-based lending platform, has divested from crypto firm Orthogonal Trading, claiming it "misrepresented its financial position."

Previously, Orthogonal was scheduled to repay a $10 million USDC stablecoin loan on Dec. 4 from a loan pool managed by M11 Credit. Orthogonal is Maple's lead borrower, as well as the manager and underwriter of Maple's loan pool.

M11 Credit has issued notices of default to Orthogonal for all active loans in Maple’s USDC stablecoin pool, four of which have $31 million in outstanding debt.

In a statement, Maple said Orthogonal was "operating in a near-insolvency situation," and did not say it was incapable of paying its debts.

"This misrepresentation is a violation of Maple's agreement and will pursue all appropriate legal avenues to recover funds, including arbitration or litigation, if necessary," the statement said.

Orthogonal’s default could be another blow to the crypto lending and unsecured lending protocol as it continues to grapple with the fallout from the implosion of crypto exchange FTX.

Maple Finance and M11 Credit have resolved troubled market maker Auros Global's failure to repay a loan.

M11 Credit wrote in a blog post on Monday that it learned from Orthogonal on Dec. 3 that it “suffered losses greater than…” as a result of being unable to repay its debts as a borrower due to the funds held by FTX.

"We are appalled and disappointed by Orthogonal Trading's actions," the M11 Credit statement read. "The intentional misstatement of information materially impacted our ability to manage outstanding credit risk during the numerous engagements we have had over the past few weeks."