- BVI-based Orthogonal Trading is reportedly in preliminary liquidation.
- M11 Credit filed for liquidation with the Maple Foundation earlier this month.
British Virgin Islands-based crypto trading house Orthogonal Trading appears to have added its name to the list of crypto companies struggling after the collapse of FTX.
$36 million loan default
Earlier this month, Orthogonal Trading was served with a default of $36 million in loans from M11 credit. The creditor operates three lending pools on the popular DeFi lending protocol Maple Finance. According to a statement from M11 on December 5, Orthogonal allegedly misrepresented their financials.
As is the case with several crypto companies, the problem stemmed from the collapse of the infamous crypto exchange FTX. The trading company reportedly suffered a huge loss due to the funds held on the bankrupt exchange and became insolvent.
However, M11 has alleged that Orthogonal deliberately miscalculated their exposure to FTX and attempted to recoup their losses by continuing to trade, leading to a loss of capital.
British Virgin Islands court orders liquidation
M11 Credit increased Twitter earlier on Dec. 23 to provide an update on the situation with the crippled trading firm. The creditor, along with the Maple Foundation, has filed an urgent ex parte application to the High Court of the British Virgin Islands to appoint interim liquidators over Orthogonal.
According to the update, the court granted M11’s request. M11 Credit and the Maple Foundation have engaged Kroll to serve as liquidator in this case. “The next step is for Kroll to initiate investigations into the assets and take control of Orthogonal accounts.” read the tweet.
Internal conflict at Orthogonal Trading
In the hours following the notice of default to the trading company, Orthogonal Credit, the company’s credit team, issued a statement clarifying that they had no knowledge of the alleged misrepresentation of the company’s exposure to FTX.
Things got worse when Maple Finance divorced all ties to the trading firm due to its bad faith actions against M11 Credit. “It is now clear that they have operated when they were in fact insolvent, and it will not be possible for them to continue a trading business without outside investment,” their statement said.