As FTX Contagion Spreads, Crypto Trader Auros Global Misses Payment on DeFi Loan

Crypto Trader Auros Global 

Misses Payment on DeFi Loan as 

FTX Contagion Spreads

Auros Global, a cryptocurrency trading firm, is the latest to experience liquidity issues due to the FTX collapse, having missed a payment on a decentralized finance (DeFi) loan on Wednesday.

The company borrowed approximately $3 million in wrapped ether (wETH) from a credit pool on Maple Finance, a DeFi lending platform.

"Auros is experiencing a short-term liquidity issue due to the FTX insolvency," tweeted M11 Credit, a pseudonymous credit pool manager.

Auros joins the ranks of other digital-asset firms, such as BlockFi and Genesis Global Capital, experiencing financial difficulties as the crypto industry deteriorates. This phase of the now-year-long market rout began earlier this month when crypto exchange FTX and its corporate sibling Alameda Research declared insolvency and filed for bankruptcy protection. Digital Currency Group, which also owns CoinDesk, owns Genesis.

Unsecured debt owed by Auros

There are warning signs that Auros is in a precarious liquidity situation.

On Nov. 27, the trading firm borrowed 2,000 wETH ($2.6 million) with a 14-day maturity, just three days before M11's announcement about Auros' short-term liquidity issues. According to Maple's loan dashboard, Auros has an outstanding debt of 8,400 wETH ($10.7 million) to M11's wETH credit pool.

On the same day, Auros borrowed $7.5 million in USDC stablecoin from another M11-managed pool on Maple.

According to the Clearpool credit dashboard, Auros also owes $2.4 million USDC to two separate credit pools on DeFi lender Clearpool's platform. Both loans have reached their maximum, requiring the borrower to pay an unusually high-interest rate (around 23% annualized percentage rate at the time of publication).

Credora, a crypto credit rating company that works with Clearpool has downgraded Auros' creditworthiness to C. (with AA being the best grade).

Unsecured crypto lending is under strain.

Auros' missed payment is yet another setback for the current business model of unsecured crypto lending.

Several loans from decentralized lending protocols have defaulted in recent months, as digital asset trading firms have gone bankrupt due to the crypto market's devastating downturn.

TrueFi's credit pools were not paid back by Blockwater, Invictus Capital, or Alameda, leaving the platform with $11 million in bad debt. After Babel Finance's loan was liquidated in June, Maple's creditors suffered a $7 million loss.

Unsecured credit providers such as Clearpool, Maple, and TrueFi claim to be somewhat decentralized. In the event of a loan default, they must rely on traditional, time-consuming, and centralized measures such as debt restructuring or court-assisted liquidation.