Citi, Nasdaq-backed enterprise blockchain startup Symbiont files for Ch11 bankruptcy – Ledger Insights

Symbiont, the US-based blockchain startup, filed for Chapter 11 bankruptcy at the beginning of the month. The holding company is backed by the likes of Citi, Nasdaq Ventures and Broadridge, with Vanguard as one of its biggest clients. As of the middle of last year, it had raised $43 million in funding.

In December 2021, it went into production with a solution that automatically calculates margins for foreign exchange (FX) futures contracts, one of the solutions it developed in collaboration with Vanguard. It also created a blockchain platform for private market securities affiliated with Nasdaq and another for securities with securities.

One of Symbiont’s biggest projects is with Lewis Ranieri, who popularized mortgage-backed securities. That involved creating a shared data solution to be used by the mortgage servicing industry, reaching the minimum viable product stage by the middle of last year. CEO Mark Smith claimed it would be the largest single-chain application ever deployed with hundreds of thousands of lines of smart contract code.

Smith has a clear vision for Symbiont to address capital markets inefficiencies using blockchain by creating native golden records of assets on the Assembly blockchain. However, he believes that the blockchain layer could become commoditized, so the company focused on developing vertically integrated solutions with its smart contract language.

The bankruptcy trigger

According to the bankruptcy petition, the trigger was the inability to repay a loan from LM Funding secured by Symbiont’s assets and due on 1 December this year. LM Funding is a listed specialist lender and also a Bitcoin miner. Symbiont entered into a loan agreement on December 1, 2021, drawing down $2 million of a $3 million facility at a rate of 16%.

We suspect that the purpose of the loan may have been to bridge an expected payment over a court case. Last year, Symbiont won a lawsuit against IHS Markit-owned IPREO for up to $78.9 million in damages. Before IHS Markit acquired IPREO, Symbiont had a joint venture with IPREO to address the secondary market for syndicated loans.

The judge ruled in favor of Symbiont in August 2021. However, IHS Markit appealed, hence the probable cause of the loan. On December 28, 2021, the companies settled and Symbiont was paid $53 million, according to the IHS Markit annual report.

The company will publish more details about the bankruptcy later this week.

Aside from the FTX debacle, two major DLT initiatives have stalled in the past month. The Australian Securities Exchange (ASX) pulled the plug on its replacement post-trade system CHESS. And Maersk announced that it is ending its Tradelens shipping initiative with IBM. This follows the liquidation of the bank-backed trade finance platform we.trade in June.

Hat tip to Coindesk for first reporting the Chapter 11 filing.