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Crypto trading and market making firm Auros, a victim of crypto exchange FTX’s bankruptcy, has overcome its liquidity struggles, Chief Investment Officer Benjamin Roth told CoinDesk in an interview.
Auros was released from a court-supervised provisional liquidation last week after a major debt restructuring, and secured a $17 million fresh investment led by traditional high-frequency trading company Vivienne Court Trading and public bitcoin mining company Bit Digital (BTBT).
The turn of events comes after months of behind-the-scenes maneuvering to keep the firm running following the implosion of crypto exchange FTX, which wiped out multiple crypto firms and caused painful losses at some trading companies.
Before the FTX crash, Auros was among the top 10 to 15 digital asset market makers, handling about 1% to 2% of the total crypto trading volume, according to the company. The firm encountered liquidity troubles in November when some $20 million of its digital assets were stuck on now-defunct FTX and Auros missed payments on some $18 million of decentralized finance (DeFi) loans.
After filing for provisional liquidation on the British Virgin Islands, the firm spent about five months under court supervision negotiating how to repay its outstanding debt and make its creditors whole. Roth said the company is leaving the FTX shock behind.
“We're the same company that we were pre-FTX,” he said.
Read more: These Crypto Market Makers Were Wary of FTX Before Collapse
Navigating FTX fallout
After FTX imploded, and as fear among market participants mounted about a full-blown insolvency crisis in crypto, lenders raced to recall outstanding loans to mitigate potential losses. With a significant chunk of funds locked up on FTX, Auros faced a sudden liquidity crunch to repay all of its desperate creditors.
“We were in a position where we didn't have enough liquid funds to meet all of those open term loans,” Roth said.
The Auros management decided not to repay any of the lenders at the time and voluntarily filed for provisional liquidation with the British Virgin Islands (BVI) court as an intermediary between lenders and Auros.
“We weren't paying immediately because our intention was to pay back everything,” according to Roth. “We've been profitable, so it really was just a matter of buying time to ensure that creditors were all treated fairly and equally.”
The BVI assisted in restructuring all outstanding Auros debt, converting outstanding open-term loans – credit lines without a repayment deadline – to termed loans with maturity. As for the some $18 million of DeFi loans, the firm already repaid 55% of its debt on blockchain-based credit platform Maple, and spread the rest to nine-month and three-month loans, CoinDesk reported last month. Roth declined to disclose details about the restructured debt to centralized lenders citing contractual obligations.