Alameda liquidators lost $72 000 in aWBTC while closing a position on Aave

What’s new? The team involved in the restructuring of the bankrupt Alameda Research lost 4б05 aWBTC (~$72 000) in an attempt to transfer funds to the trading firm’s multi-signature wallet when closing a position on the platform of the Aave DeFi protocol. Arkham Intelligence, an analytics firm, reported this. Zachary Lerangis, head of operations at Arkham, told Decrypt that “the liquidators would benefit from having a DeFi expert to advise on the mechanics of closing Alameda DeFi positions and retrieving as much money as possible.”

Source: Twitter.com

More details on the situation. On Aave, borrowers post collateral and take a loan against it. The protocol requires that the loans be overcollateralized, meaning the ratio of collateral to borrowed funds must be above a certain threshold or there is a risk of liquidation. Once the loan is repaid, the borrower can unlock his collateral.

Alameda’s liquidators probably did not know that. “Rather than paying back the debt to close out the position, the liquidators opted to remove all the extra collateral, putting the position in danger of liquidation,” the Arkham team writes. These actions resulted in the loss of wrapped bitcoins.

But that was not the team’s only mistake, Arkham said. Other blunders included nine failed attempts to move $1,75 million worth of Lido (LDO) staking platform tokens still in circulation.

There is another wallet, according to Arkham, owned by Alameda, that sent $0,6 in DAI stablecoins and $0,02 in COLLAR tokens. At the same time, the address still has $1,5 million in funds that have not yet been transferred.

The Arkham wallets identified contain at least $25 million in Alameda funds placed in DeFi protocols. For example, 6 million USDC is being used to secure a $2 million NEAR loan on the Bastion protocol. There are also funds stuck on other networks. One Alameda wallet shows a balance of $300 on Etherscan, but it still has $4,4 million in ETH, according to Aurorascan.

The WSJ previously reported that Alameda Research’s problems began long before FTX’s collapse. Former FTX CEO Sam Bankman-Fried was constantly trying to borrow cash and cryptocurrency for high-risk investment schemes, promising lenders double-digit interest rates.