Orthogonal Trading becomes the latest victim of the contagion resulting from FTX’s bankruptcy, while it may invade DeFi.
A hedge fund unable to repay its loans
History repeats itself in the cryptocurrency sector: new victims of the crisis are constantly emerging. Loan companies, credit companies and other speculative funds seem to be the preferred targets for contagion. While the future of Genesis Trading remains closely watched, it is the turn of Australian hedge fund Orthogonal Trading to report similar difficulties.
According to Bloomberg, the company would indeed have taken out more loans in order to survive in light of the delicate situation of the industry and the instability of cryptocurrencies. Nevertheless, Orthogonal Trading, despite many efforts internally, would not be able to repay the approximately $36 million borrowed from various players in the sector.
For now, despite all its financial difficulties, the hedge fund doesn’t seem to be considering bankruptcy yet.
Orthogonal trading has its secrets: are creditors also threatened?
Like most crypto companies weakened by FTX’s bankruptcy, Orthogonal Trading could be the trigger for another domino effect in the sector. The hedge fund has actually done business with many other players, putting them in a weak position.
Among these is the company M11 Credit, which made headlines last week by denouncing the funding problems suffered by its creditor Auros Global. With a new customer in default, the credit pool may also put drastic measures in place to ensure its survival.
Finally, the Maple Loan Protocol would have cut all ties with Orthogonal Trading after discovering that the latter would not repay the $10 million contracted with it. In a press release, she claims the Australian hedge fund lied to her about her true financial situation.
Enough to send shivers down the spines of members of the cryptosphere, at a time when the real insolvency of companies is gradually being revealed. If Sam Bankman-Fried was the catalyst for the disaster, he may be right: many players were already fragile before the crisis even began.
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