Statement from the Orthogonal Credit Team — December 5th 2022

Over the weekend, the Orthogonal Credit Team was notified of new information pertaining to Orthogonal Trading’s exposure to FTX and its inability to repay an outstanding loan in the M11 Credit pool maturing December 4th 2022. It is our understanding that Orthogonal Trading misrepresented their exposure, and hence the M11 Credit team had to take immediate action to issue a Notice of Default. Due to the materiality of misrepresentations, Maple has decided to terminate its relationship with Orthogonal Trading. Orthogonal Credit had no knowledge of the misrepresentation. Despite Orthogonal Trading and Orthogonal Credit operating separately, we are unfortunately affected by Maple’s decision given Orthogonal Trading’s first loss capital will become a claim to M11 Credit lenders.

We are shocked and dismayed. Given Orthogonal Credit operates structurally separate from Orthogonal Trading, we are speechless by the extent of the exposure and liquidity position of Orthogonal Trading’s book of business. The Orthogonal Credit USDC01 pool cover (first loss capital) was provided by Orthogonal Trading as part of the firm’s diversification strategy to develop a credit business on the Maple Finance platform. Nevertheless, Orthogonal Credit has no insight to or influence over the market making and trading activities undertaken by the Trading business.

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. Our team made the move from traditional finance into DeFi with the goal to build a better version of the financial system, and our vision remains unchanged. As demonstrated by our track record and decision to step away from a profitable lending relationship with Alameda, we value transparency and integrity above profits. We were instrumental in pushing the Maple ecosystem to do the same and we will continue to move forward with the highest standards of conduct, competence, and professionalism. We will maintain open lines of communications on any developments in our endeavor; please reach out if you have any questions or would like to speak with the team.

For existing LPs, we’d like to reiterate the key messages regarding the Orthogonal Credit USDC01 Pool:

• Assets in the Pool continue to be protected by Maple’s smart contract infrastructure and separate from Orthogonal Trading.
• We do not anticipate any impact to lenders in the Pool as all loans remain active with no current signs of distress.
• Loan repayments will be made over the coming months with all available cash being used to facilitate withdrawal requests from the Pool.

Sincere Regards,

Orthogonal Credit