Alameda Research Wallet Liquidators Suffer $11.5M Losses: Arkham

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 0x997,” 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. 

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] to an 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 “secret backdoor line of credit” for Alameda Research. FTX attorney, Andrew Dietderich, claimed the alleged line of credit was financed with FTX customers’ funds. Dietderich’s had specified the “backdoor was a secret way for Alameda to borrow from customers on the exchange without permission.”