Alameda Research Wallet Liquidators Suffer $11.5M Losses: Arkham

Alameda Research Wallet Liquidators Suffer $11.5M Losses: Arkham
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Crypto analytics firm, Arkham Intelligence revealed that one wallet under the control of liquidators of Alameda Research have incurred a loss of nearly $11.5 million. Arkham reported at least $4 million of these losses were preventable.

On January 17, Arkham took to Twitter to report a total loss of around $11.5 million that happened over two weeks after liquidators took over a single wallet of Alameda. The report noted that two weeks before liquidators took over the Alameda wallet ā€œ0x997,ā€ it maintained a short position of around 9000 Ethereum (ETH) that was worth $10.8 million at the time.

How did the Loss Happen?

Alameda Research Wallet Liquidators Suffer $11.5M Losses: Arkham

This was maintained against a collateral of $20 million Circle USD (USDC) and $4 million MakerDAO (DAI) with a net balance of $15.2 million. However, as of today, it is estimated that wallet’s current balance at a short position of $1.1 million ETH against $1.4 million USDC with a net balance of $300,000.Ā 

It is evident for the numbers that the wallet has endured significant losses since the liquidators took over the Alamed wallet. Furthemore, on 29 December, Alameda wallets transferred $7 million in USDC and $4 million in DAI from the decentralized crypto lending platform Aave [AAVE]Ā to anĀ Optimism [OP] L2 account, 30 hours after liquidators began moving assets out of Alameda wallets. Arkham highlighted the development as a “series of market movements that have busted multiple Alameda positions left open after bankruptcy” stating,

“The removal of $7M USDC and $4M DAI from the active position on AAVE placed it dangerously close to liquidation. Since then, $11.4M of USDC has been sold off to liquidation bots on Optimism.”

$4M Loss Could have been Prevented

Arkham argued if liquidators had immediately closed the position by selling off collateral rather than withdrawing collateral from the wallet, at least $15 million could have been saved instead of the $11 million recovered.

The analytics firm also specified that on 12 January, Alameda Research liquidators lost crypto assets worth $72,000 while consolidating funds into a single wallet on Aave. It is believed that there is around $300K still recoverable from this position on AAVE.

Recently, it was reported that the former FTX CEO, Sam Bankman-Fried (SBF) had reportedly ordered Gary Wang, co-founder of the crypto exchange, to open a $65 billion ā€œsecret backdoor line of creditā€ for Alameda Research. FTX attorney, Andrew Dietderich, claimed the alleged line of credit was financed with FTX customers’ funds. Dietderich’s had specified the ā€œbackdoor was a secret way for Alameda to borrow from customers on the exchange without permission.ā€

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