Recently, the biggest blow to Bitcoin and altcoins came with the FTX crisis. FTX, once one of the largest cryptocurrency exchanges, went bankrupt in mid-November after experiencing a liquidity crisis after claims of illiquid funds. This has created a domino effect in the cryptocurrency market. After FTX, companies such as Genesis and BlockFi were in a difficult situation. It seems that a new one has been added to the platforms affected by FTX. Here are the details…
Nexus fund in jeopardy after FTX crisis
Insurance alternative Nexus Mutual expects to lose on its loan pool investment on Maple Finance, a major decentralized lending platform, according to a statement released Monday. Nexus has warned of a potential loss of 2,461 Ethereums (ETH), about $3 million, due to the recent default of Orthogonal Trading. He said it has started withdrawing all funds from the affected wrapped Ethereum (WETH) loan pool. According to the statement, this represents 1.6 percent of Nexus’ assets.
In August, Nexus deposited 15,463 ETH, worth approximately $19.3 million at current price, into the WETH loan pool on Maple Finance, following community voting. Nexus is a peer-to-peer, risk-sharing protocol that offers an alternative to insurance against risks such as DAO attacks and smart contract failures in decentralized finance (DeFi). NXM is managed by the community of token holders, as we have also reported as Kriptokoin.com.
$5 million defaulted
However, more Nexus funds seem to be at stake. Orthogonal Trading’s defaulted debt in Maple’s WETH loan pool amounted to approximately $5 million (3,900 wETH). On top of that, embattled market maker Auros Global failed to repay the $3.1 million (2,400 wETH) loan and has another $7.5 million (6,000 wETH) active loan outstanding from the same pool.
Troubled debt represents 56 percent of the $27.8 million in outstanding debt in the wETH loan pool, according to Maple’s credit board. Only $3.1 million in cash deposits are not actively tied to loans, limiting Nexus’ ability to withdraw funds. Maple has a 10-day waiting period for depositors to withdraw capital.
Nexus Mutual’s warning is due to the explosion of FTX, once one of the world’s largest crypto exchanges, spreading to DeFi lending protocols. Orthogonal Trading received a notice of default for a total of $36 million in loans in Maple after allegedly misrepresenting its losses from the FTX collapse to creditors. Auros Global said last week that it was facing “short-term liquidity problems” and missed the payment of a loan from Maple.
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