Maple Finance Says Orthogonal Hid FTX Exposure

Orthogonal Trading is both a borrower in one Maple pool and, independently, an operator of a separate pool




Maple Finance has cut ties with Orthogonal Trading after it said the company was “operating while effectively insolvent” and accrued liabilities of more than $30 million. 

Orthogonal Trading had mischaracterized its financial position to M11 Credit’s pool over the last four weeks before saying on Saturday that it was unable to meet loan repayments, according to M11 Credit and Maple Finance. 

Loading Tweet..

A Maple spokesperson told Blockworks that there were no signs of the insolvency, noting that financials in recent weeks were “misrepresented” and principal payments gave the appearance of solvency.

“Misrepresentation like this is in violation of Maple’s agreements and all appropriate legal avenues to recover funds will be pursued including arbitration or litigation as necessary,” Maple said in a statement Monday. 

Pool delegates on Maple’s platform are responsible for managing due diligence on borrowers and are consistently exploring ways in which assets can be further verified, a spokesperson added.

An Orthogonal Trading spokesperson did not immediately return a request for comment. 

Orthogonal Trading’s current liabilities are $31 million across four loans in the M11 Credit USDC pool. M11 Credit has restructured the loan book and closed many loans early, according to Maple.

Orthogonal Credit, which operates separately from Orthogonal Trading, said in a blog post it had no knowledge of the latter entity misrepresenting its exposure to FTX and its inability to repay an outstanding loan in the pool that matured on Sunday. 

“Orthogonal Credit has no insight to or influence over the market making and trading activities undertaken by the trading business,” the firm wrote. “In light of this development, the credit team is actively seeking strategic solutions to continue to provide credit-as-a-service across self-custodial decentralized finance protocols.”

Maple aggregates capital on behalf of large borrowers. Founded in May 2021, Maple hit $1 billion in loans in its first 10 months and has now issued more than $1.9 billion in loans, according to its website. Total deposits are now roughly $125 million. 

The several lending pools managed by distinct pool delegates are siloed to prevent activities in one pool from impacting others, a spokesperson told Blockworks.

Crypto investment firm M11 Credit revealed the launch of a $40 million institutional lending pool on Maple in August — its third on the platform.

Orthogonal Credit maintains a separate “Orthogonal Trading — USDC01” pool, which, despite its name, does not contain loans to the Orthogonal trading arm.

Orthogonal Credit wrote in its Monday blog post that assets in the USDC01 pool are protected by Maple’s smart contract infrastructure and separate from Orthogonal Trading. The pool’s three active loans are to Portofino Technologies AG, a financial infrastructure technology company incorporated in Switzerland, Wintermute Trading Limited, a major market maker, and Reliz Ltd., a Maltese marketing agency.

“We do not anticipate any impact to lenders in the pool as all loans remain active with no current signs of distress,” according to Orthogonal Credit. “Loan repayments will be made over the coming months with all available cash being used to facilitate withdrawal requests from the pool.”

Orthogonal Credit did not immediately return a request for further comment. 

A product of FTX contagion

The news comes as the crash of crypto exchange FTX continues to send ripple effects through the crypto ecosystem. 

Maple said in a statement on Nov. 9 — two days before FTX filed for bankruptcy — that borrower exposure to FTX and its native token, FTT, was limited.

A week later, Maple reported that while the past six months had “stress-tested” borrowers on the platform, many remained well-capitalized and able to withstand shocks.  

“Maple and delegates anticipate that borrowers will service their loans as expected,” the company said at the time. 

Still, pool delegates de-risked to avoid “second-order” impacts of the FTX collapse, Maple added. A total of 37 loans to 12 borrowers totaling $227 million from the week prior had been reduced to 24 loans to 10 borrowers, totalling $129 million.

While many risk mitigations are built into the Maple platform, the contagion in this instance was difficult to avoid, Maple said. 

Any fees generated in this pool ahead of its expected closure in the first quarter of 2023 are set to go toward recovering funds for lenders in the M11 Credit pool.

Maple’s MPL token was down about 24% in the past 24 hours, as of 12:15 pm ET Monday.

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.


Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2023

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Cover Vertex.jpg


The proliferation of new perp DEXs has led to fragmented liquidity across various DEXs and chains. Vertex, known for its vertically-integrated DEX that includes spot, perpetual, and integrated money markets, is now tackling cross-chain liquidity fragmentation through horizontal integration with the launch of new Edge instances. Vertex's integrated offerings and cross-margined account structure amplify the benefits of new instances: native cross-chain spot trading, optimized cross-chain basis trading, consistent interest rates, reduced bridging friction, and more.


Partnering with EtherFi and Angle, the fully on-chain perp DEX features bespoke collateral



Gavin Wood introduced the next evolutionary step for the Polkadot network: the Join-Accumulate Machine, or JAM


The side events were the places to be at Consensus 2024, according to attendees


Also, who’s come out swinging in the spot ether ETF fee war — and who could undercut them


I know it is not in their nature, but US regulators could learn a lot by researching the digital asset frameworks that overseas regulators have already gotten right


Also, the ETF hype train can count out at least one member