Decentralized lending protocol TrueFi announced that Blockwater Technologies has defaulted on a loan, which is another example of the cryptocurrency industry’s insolvency crisis.

The protocol issued a “notice of default” to the South Korean blockchain investment firm on Oct. 6 after it failed to repay a $3.4 million loan on Binance USD (BUSD) stable coinaccording to a statement from TrueFi.

Blockwater’s debt default came after the two companies restructured the loan and extended the payment period in August.

The blockchain investment firm has only managed to pay off $654,000 of its outstanding debt following the restructuring decision. However, the company did not make the payment on time and the debt currently stands at $3 million.

A loan default means that a business has failed to make loan payments according to the terms and conditions agreed to by both parties.

According to the loan protocol statement, TrueFi determined that “a potential court-supervised administrative proceeding would lead to a better outcome for the parties given the complexity surrounding the sudden insolvency.”

“While we always prefer to seek an out-of-court solution with distressed borrowers, in some cases an administrative proceeding is the best option to preserve value for stakeholders,” Roshan Daria, Head of Lending at ArchBlock, responsible for managing relationships between the lenders. and borrowers on the TrueFi protocol, he told CoinDesk.

Many cryptocurrency companies have gone bankrupt this year due to the dramatic decline in the cryptocurrency market, made even worse after the implosion of the Terra blockchain. Firms that have filed for bankruptcy include hedge fund Three Arrows Capital (3AC), crypto lender Celsius Network, digital asset broker Voyager Digital, and crypto mining data center operator Compute North.

TrueFi remained in “active discussion” with Blockwater. According to the statement, he said that Blockwater’s insolvency does not affect the other lending groups in the protocol.

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