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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 “0x997,” it maintained a short position of around 9000 Ethereum (ETH) that was worth $10.8 million at the time.
Our story begins early on 14th January, when an Alameda Liquidator account, 0x997, suffered a $1M+ liquidation on AAVE, on the Optimism network.
This was the latest in a string of liquidations spanning almost 2 weeks of the account being under Liquidator control. pic.twitter.com/uD5KHCBryM
— Arkham (@ArkhamIntel) January 16, 2023
How did the Loss Happen?
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.”
When taken over by Liquidators as of 2 weeks ago, 0x997 maintained a short position of 9000 $ETH ($10.8M) against collateral of $20M USDC and $4M DAI: net balance of $15.2M.
Today, the account’s current value stands at $1.1M short Ether against $1.4M USDC: net balance of $300K. pic.twitter.com/k4WiEWfFlB
— Arkham (@ArkhamIntel) January 16, 2023
$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.
But back to the present.
Currently, there is around $300K still recoverable from this position on AAVE.
However, if $ETH rises much more, this will simply be liquidated instead. pic.twitter.com/7txyN730LZ
— Arkham (@ArkhamIntel) January 16, 2023
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.”
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