By Michael Scott
Auros Global announced a successful restructuring to resume operations following the $20M exposure in the bankrupt FTX. The crypto firm that offers trading services admitted initiating restructuring plans to regain liquidity.
Source of Liquidity Crisis
Auros Global statement disclosed that the sudden FTX collapse plunged it into a liquidity crisis. In Particular, Auros suffered insufficient liquidity to honor recalls initiated by lenders. Nevertheless, Auros management expressed confidence in navigating the liquidity crisis attributed to the FTX contagion.
The update issued by Auros demonstrated the restructuring initiative allows the existing management to continue operations as the authorized managers. In addition, the arrangement features an external advisory firm supervising the management decisions and actions till it attains a comprehensive restructuring plan.
Light Touch Protection to Restructure
The statement portrayed optimism of the crypto trader restoring normal operations upon implementing the restructuring plan. The update indicated Auros Global sought light touch protection in the provisional liquidation order.
The company considered the light touch application since its balance sheet proved solvent despite the cash flow challenges. Auros embraced the light touch to overcome the cash flow insolvency challenge through corporate restructuring.
The corporate restructuring was necessary for Auros Global, with December 1 reports indicating dishonoring principal repayment advanced as a DeFi loan. Auros admitted its inability to settle its obligation of a 2,400 Wrapped Ether (wETH) loan citing the FTX contagion.
The revelation came 24 hours after the M11 Credit tweeted the default. The institutional credit underwriter involved in managing liquidity pools within Maple Finance confirmed Auros missed the $3 million DeFi loan denominated in 2400 wETH loan.
Acute Liquidity Crisis
The default placed Auros Global in the expanding list of crypto firms confronting financial distress from direct and indirect exposure to the FTX’s collapse. Besides FTX Group and its affiliates, other crypto firms have sought Chapter 11 protection.
Auros Global follows in the footsteps of Core Scientific and Greenidge to restructure for its survival. The approach contrasts decisions undertaken by Digital Currency Group that recently froze transactions citing a liquidity crunch. The move prompted Bitvavo to refund users with their digital assets trapped in DCG wallets.
The decision to restructure portrays a noble decision amidst the acute liquidity crisis set to worsen unless the crypto market turmoil ends.