Alameda Wallet Lost $11.5M Being under Control: Arkham
Arkham, a crypto analytics firm, estimates that at least $4 million of these losses could have been avoided.
Since assuming possession of Alameda Research’s trading accounts, the liquidators are said to have lost at least $11.5 million. On January 16, Arkham Intelligence reported on Twitter that a wallet under liquidators’ control had had a spate of “severe losses” as a result of liquidations, some of which were “preventable losses.”
For instance, Arkham pointed out that when the liquidators first took over, the account with the final 0x997 held a short position of 9,000 Ether ($10.8 million) against the collateral of $20 million in USD Coin and $4 million in Dai, with a net balance of $15.2 million. Nevertheless, following a series of liquidations that lasted over two weeks, the account’s worth is currently “$1.1M short Ether against $1.4M USDC: net balance of $300K.”
The latest in a “series of market swings that have busted many Alameda positions left open after bankruptcy,” according to Arkham, is this latest event. On December 29, almost 30 hours after liquidators started moving assets out of Alameda wallets, Alameda wallets transferred $7 million in USDC and $4 million in DAI from the decentralized cryptocurrency lending site Aave to a different Optimism L2 account, resulting in another liquidation.
Due to the significant risk of liquidation caused by this withdrawal of funds, $11.4 million in USDC was sold to liquidation bots on Optimism, and the Aave Treasury also took $100,000 in USDC as a liquidation tax.
Arkham stated that instead of withdrawing collateral from the wallet, liquidators should have used a mechanism to cancel the position immediately, preserving at least $15 million as opposed to the $11 million they were able to retrieve. Thus, the losses that could have been avoided came to $4 million.
The assets were at risk of being liquidated when the liquidators attempted to settle a borrow position while wrongly removing further collateral. The loan was twice liquidated within nine days, resulting in a total loss of 4.05 Wrapped Bitcoin (WBTC), which cannot be recovered by creditors.