Alameda Research liquidators reportedly incurred at least $11.5 million in losses since taking control of the defunct hedge fund’s accounts.
On January 16, a Twitter thread from Arkham Intelligence reported that a portfolio under the control of liquidators has suffered a series of “significant losses” due to liquidations, some of which were “avoidable losses”.
Over the past two weeks being under Liquidator control, the account incurred significant losses:
Largest single settlement: $4.85M
Total liquidated amount: $11.5M
Preventable losses: $4M+—Arkham (@ArkhamIntel) January 16, 2023
As an example, Arkham noted that the account ending 0x997 was initially short de 9,000 Ether (ETH) ($10.8 million) against the guarantee of USD 20 million in USD Coin (USDC) Y USD 4 million in Dai (DAI), with a net balance of $15.2 million when the liquidators first took control.
However, after a series of liquidations that lasted almost two weeks, the current account value is “$1.1 million short Ether vs. $1.4 million USDC: $300,000 net balance.”
Arkham said this is the latest development in a “Series of Market Moves That Have Busted Multiple Alameda Positions Left Open After the Bankruptcy”.
Another liquidation occurred when Alameda wallets withdrew $7 million in USDC and $4 million in DAI from decentralized cryptocurrency lending platform AAVE to a separate Optimism L2 account on Dec. 29, around 30 hours after the liquidators began moving assets out of the Alameda wallets.
This withdrawal of funds is believed to have placed the position at high risk of liquidation, which caused 11.4 million USDC to be sold to liquidation bots on Optimism, while the AAVE Treasury took another USD 100,000 in USDC as liquidation tax.
Arkham explained that if the liquidators had used a function to immediately close the position by selling collateral instead of withdrawing it from the wallet, at least $15 million could have been kept instead of the $11 million recovered.
This meant, therefore, USD 4 million in avoidable losses.
On January 13, Cointelegraph Reported that Alameda Research Liquidators Lost $72,000 in Digital Assets while consolidating funds into a single wallet on the DeFi lending platform; aave.
Liquidators attempted to close out a loan position, but mistakenly removed additional collateral, putting the assets at risk of liquidation. In a nine-day period, the loan was paid off twice, resulting in a total loss of 4.05 Wrapped Bitcoin (WBTC) that cannot be recovered by creditors.
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