Maple Finance, a DeFi corporate lending platform, announced that it would be cutting ties with Orthogonal Trading, a crypto trading firm, alleging that the latter misrepresented its financial position. Orthogonal is a major borrower on Maple across multiple lending pools, as well as a manager and underwriter of its own lending pool on Maple.

M11 Credit, a subsidiary of Maven 11 Capital (an investment firm), stated that Orthogonal had “incurred larger losses than previously disclosed", due to funds held on the now bankrupt FTX, resulting in the company not being able to repay its debt. The statement came after Orthogonal failed to pay back a loan of USD 10 million from a credit pool managed by M11 Credit on December 4th. M11 Credit went on to issue a notice of default to Orthogonal for all four of its active loans worth USD 31 million on Maple's USDC stablecoin pool (close to 80% of the value of the entire pool). 

This default also resulted in Nexus Mutual, a DeFi insurance protocol, stating that it expects to take a USD 3 million loss on its investment of USD 19.3 million (representing 1.6% of its total assets) in credit pools on Maple Finance. The company went on to state that it has begun withdrawing all funds from the affected pool. 

Analyst QuickTake: The recent collapse and subsequent bankruptcy of FTX , one of the largest cryptocurrency exchanges has had a ripple effect across the DeFi industry with many protocols facing issues related to their exposure to the platform. Currently, 56% of the total USD 27.8 million of outstanding loans in Maple’s wrapped Ethereum credit pool is considered “troubled debt.”