Alameda Wallet In Liquidation Loses $11.5m in 2 Weeks

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Key takeaways:

  • Four million dollars or more of these losses may have been avoided.
  • Alameda’s wallet cost $11 and was in the care of the liquidator.

Since assuming possession of Alameda Research’s trading accounts, the liquidators are said to have lost at least $11.5 million.

According to an Arkham Intelligence Twitter thread dated January 16, a wallet in the hands of liquidators had seen a spate of “major losses” due to liquidations, some of which were “preventable losses.”

The account is currently worth “$1.1M short Ether versus $1.4M USDC: net balance of $300K” following a series of liquidations that lasted over two weeks. According to Arkham, this is the most recent change in a string of market shifts, which have busted numerous Alameda jobs left unfilled following the bankruptcy.

According to Arkham, two weeks before liquidators seized control of Alameda wallet “0x997,” the address kept a short position of 9000 Ethereum (ETH), which was then worth $10.8 million, against the collateral of $20 million Circle USD (USDC), $4 million DAI, and a net balance of $15.2 million.

Arkham mentioned a different liquidation that took place on December 29, 2022, during which Alameda liquidators transferred $7 million USDC and $4 million DAI from AAVE to another L2 Optimism (OP) account called “0x7b7.”

The Alameda positions were “dangerously close to liquidation” due to the loss of collateral from AAVE. According to Arkham, the end effect was that $11.4 million USDC was eventually sold to liquidation bots on Optimism, and the AAVE treasury collected over $100,000 USDC in liquidation tax.

“The pattern of removing excess collateral from active positions fits the profile of their usual behavior.”

According to Arkham, liquidators could have used a method to instantly cancel the position rather than taking collateral out of the wallet, preserving at least $15 million as opposed to the $11 million they were able to recover. The losses that could have been prevented totaled $4 million as a result.

The assets were in danger of being liquidated when the liquidators attempted to settle a borrow position while wrongly removing further collateral. The loan was twice liquidated within a nine-day period, resulting in an overall loss of 4.05 Wrapped Bitcoin (WBTC), which creditors cannot recover.

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