Crypto Trading Firm Auros Discloses Provisional Liquidation

Auros Global, the troubled crypto trading firm and market maker, disclosed Tuesday that it was granted a “Provisional Liquidation” request last month from a court in the British Virgin Islands, as part of efforts to restructure outstanding debt to lenders.

In a statement posted to Twitter, Auros said that the decision followed “the events that transpired around FTX,” the crypto exchange formerly helmed by Sam Bankman-Fried that imploded in November.

“The company found itself in a position where immediate liquidity was insufficient to satisfy recalls from lenders,” according to the statement. “Management and directors remained confident in the long-term prospects for the business.”

Auros said that the court order allows for a “restructuring mechanism where the incumbent management is permitted to continue to trade in the capacity of ‘Authorized Managers,’ under the supervision of an external advisory firm, whilst a restructuring plan is being formulated.”

“Upon the successful implementation of the restructuring, it is anticipated that Auros’ operations would resume as normal,” Auros said.

The firm had $20 million of funds frozen on FTX, according to the intelligence site OffShoreAlert, which cited a Nov. 16 court filing submitted to the British Virgin Islands High Court. The news was previously reported by The Block.

According to OffshoreAlert, an intelligence site that monitors financial firms, Auros Global Ltd. submitted the request for provisional liquidation on Nov. 16.

The court granted the request on Nov. 23, Auros said.

Financial advisory firm Interpath Advisory acts as supervisor, per the Auros statement.

Auros encountered liquidity troubles after the sudden implosion of FTX. Multiple trading firms held a part of their funds on the exchange for trading purposes, and were subsequently hit when FTX halted withdrawals on Nov. 8 and filed for Chapter 11 bankruptcy protection on Nov. 11. Funds on the exchange are now tied up in a lengthy court proceeding.

Auros liquidity problems

The liquidity problems at Auros percolated to creditors on lending protocols, as the embattled trading firm has some $20 million of outstanding loans from credit pools on Maple Finance and Clearpool.

The wider crypto community first learned about the struggles of Auros on Nov. 30, when M11 Credit tweeted about Auros missing payment on some $3 million loan from a credit pool citing “short-term liquidity problems.” M11 Credit, a subsidiary of investment firm Maven 11 Capital, is a lending pool manager on Maple.

Before that, earlier in November, M11 Credit had extended maturity for two Auros loans for short terms without repayment.

To date, Auros missed payment on $17.7 million of loans from M11 Credit-managed USDC stablecoin and wrapped ether (wETH) credit pools on Maple.

M11 Credit has not issued a default notice on the loans as it is working towards a debt restructuring.

“We continue to believe at this time that we're on a path to a successful restructuring,” M11 Credit tweeted on Tuesday.

The Auros filing for provisional liquidation came as creditors were anxious about their money tied up in impacted credit pools.

Nexus Mutual, an insurance alternative for decentralized finance, is a large creditor of the wETH credit pool on Maple impacted by Auros loans, CoinDesk reported earlier. The same credit pool was also rocked by Orthogonal Trading’s default, which left Maple creditors facing losses on the $36 million of unpaid loans.