This year, Orthogonal Credit, which oversees unsecured loan pools on Maple Finance, said that it has rejected funding to Alameda.
Orthogonal Credit, a delegate business that runs lending pools on Maple Finance, said that it decided early this year not to lend to Alameda Research, the sibling trading firm of the FTX exchange that is now experiencing liquidity difficulty.
Orthogonal said today, without providing specifics, that it identified some “weaknesses” in Alameda before its current issue after doing risk management due diligence.
Orthogonal had previously provided $288 million in loans with a designated pool for Alameda that began in November 2021 and concluded in May 2022. Since February 2022, Orthogonal has not insured a loan to Alameda in another pool named USDC01.
According to Orthogonal, these so-called flaws are to Alameda’s business processes, the integrity of its balance sheet assets, and its corporate structure. These circumstances compelled Orthogonal to terminate its financing relationship with Alameda.
Maple is an unsecured lending protocol that offers parties loans without initial collateral. The loans are administered by pool delegates who verify the creditworthiness of borrowers using off-chain measures to ensure they are in a position to repay payments.
Orthogonal stated in a Twitter post, “During our Alameda due diligence early this year, the team observed a number of major weaknesses: a) deteriorating asset quality, b) unclear capital policy, c) less than sound operational and management procedures, and d) an increasingly byzantine corporate structure.”
Another Maple Finance delegate, Maven 11, said that it does not have any outstanding debts with Alameda Research. As the biggest pool delegate, Maven 11 initiated the decision not to sanction more loans, which was subsequently adopted by other delegates. While Orthogonal and Maven 11 do not have any outstanding loans with Alameda, they have minor counterparty exposure to FTX.
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