Aave Liquidates Alameda Liquidators During Fund Consolidation

Jan. 14, 2023
Aave Liquidates Alameda Liquidators During Fund Consolidation

Alameda Research’s attempt to consolidate funds into a single multi-sig wallet ended in failure, as the firm’s liquidators were liquidated for $72,000 on the Aave DeFi lending platform while attempting to move assets from multiple Alameda wallets.

However, in an attempt to exit a borrow position on Aave, the liquidators of Alameda Research, unfortunately, put their funds at risk of liquidation by first removing the extra collateral, which ultimately led to their liquidation.

A crypto intelligence firm, Arkham, has¬†tweeted that the liquidators of Alameda Research’s position on Aave were liquidated twice over nine days, resulting in a total loss of 4.05 aWBTC, worth $72,000. Unfortunately, these funds will not be recoverable for the creditors.

According to Arkham, the liquidators of Alameda Research made several mistakes in their attempts to exit their position on Aave, including nine failed transactions while trying to transfer large amounts of LDO. 

The liquidators didn’t realize that the tokens were still locked and thus could not be transferred. Eventually, they were able to successfully move the funds by transferring smaller amounts of 10,000 LDO tokens.

In the past two weeks, ¬†$1.4 million worth of cryptocurrency has been successfully transferred to the creditors’ multi-sig wallet from various wallets associated with Alameda Research.

The liquidators of Alameda Research began consolidating funds 10 hours after suffering a hack in December. In addition, that resulted in the loss of  $1.7 million worth of digital assets, per the crypto intelligence firm.

Despite the recent consolidation efforts, over 50 Alameda Research wallets still contain locked assets. With the most significant being valued at over $14 million.

Alameda Research Troubles

However, the lawyer’s testimony backs up claims made by the Commodity Futures Trading Commission, an independent federal body that supervises derivatives such as futures and swaps.

Furthermore, last month, the CFTC charged Wang and Alameda Research CEO Caroline Ellison, who was also Bankman-on-again, Fried’s off-again lover.

The CFTC charged Wang with establishing a “virtually infinite” covert line of credit. Dietderich’s statement is the first time an FTX official has provided a specific financial amount for the line of credit.

Additionally, Wang and Ellison both pled guilty to federal fraud and conspiracy charges. They are helping authorities.

Bankman-Fried was arrested and brought to the United States from the Bahamas last month. However, SBF was under house arrest at his parent’s $4 million home as a condition of his $250M bond release.

Related Reading | SEC Charges Gemini & Genesis With Selling Unregistered Securities

According to a report in The Wall Street Journal, citing former employees, Alameda Research experienced significant losses due to their trading algorithm. The algorithm was intended to execute a high number of rapid trades. However, the firm caused losses due to wrong estimates of price movements.

A recent report revealed that Alameda Research struggled financially from its inception. But Bankman-Fried rescued it in 2018 with borrowed funds. He then used Alameda Research to establish the now-defunct FTX cryptocurrency exchange and drive its growth.

Ammar Raza

Associate editor
Ammar Raza is an individual with a strong interest in the world of cryptocurrency. He has written extensively on topics such as non-fungible tokens, decentralized apps, and blockchain technology. In addition, he is passionate about collaborating with innovative companies to drive meaningful change.

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