The liquidators of Alameda Research have reportedly incurred at least $11.5 million in losses since taking control of Alameda's trading accounts.
On Jan. 16, a Twitter thread from Arkham Intelligence reported that one wallet under the control of liquidators has seen a string of “significant losses” due to liquidations, some of which were “preventable losses.”
Over the past two weeks being under Liquidator control, the account incurred significant losses:
Largest single liquidation: $4.85M
Total liquidated amount: $11.5M
Preventable losses: $4M+
— Arkham (@ArkhamIntel) January 16, 2023
As one example, Arkham noted that the account ending in 0x997 initially had a short position of 9,000 Ether against the collateral of $20 million in USD Coin and $4 million in Dai, with a net balance of $15.2 million when the liquidators first took control.
After a string of liquidations spanning almost two weeks however, the account’s current value now stands at “$1.1M short Ether against $1.4M USDC: net balance of $300K.”
Arkham said this is the most recent development in a "series of market movements that have busted multiple Alameda positions left open after bankruptcy.”
Another liquidation occurred when Alameda wallets removed $7 million in USDC and $4 million in DAI from the decentralized crypto lending platform Aave to a separate Optimism L2 account on Dec. 29, around 30 hours after liquidators began moving assets out of Alameda wallets.
This removal of funds is believed to have placed the position at a high risk of liquidation, resulting in $11.4 million of USDC being sold off to liquidation bots on Optimism, while the Aave treasury took another $100,000 in USDC as liquidation tax.
Arkham explained that if liquidators had used a function to immediately close the position by selling off collateral instead of pulling collateral from the wallet, at least $15 million could have been preserved rather than the recovered $11 million.
This thus amounted to $4 million in preventable losses.
On Jan. 13, Cointelegraph reported that Alameda Research liquidators lost $72,000 in digital assets while consolidating funds into a single wallet on Aave.
The liquidators attempted to close a borrow position but mistakenly removed extra collateral, putting the assets at risk of liquidation. Over a period of nine days, the loan was liquidated twice, resulting in a total loss of 4.05 Wrapped Bitcoin (WBTC), which will not be able to be recouped by creditors.
Financial regulators in Japan have urged global regulators to treat crypto the same way as they do banking, calling for tougher rules for the sector.
According to the deputy director-general of the Financial Services Agency’s Strategy Development and Management Bureau, Mamoru Yanase, crypto needs to be controlled.
“If you like to implement effective regulation, you have to do the same as you regulate and supervise traditional institutions,” he said, according to a Jan. 17 Bloomberg report.
The comments from Japan’s financial watchdog come in the wake of the collapse of FTX in November, which rattled the industry and sparked urgency for regulatory action.
Unlike some of his U.S. counterparts, Yanase has acknowledged that the problem wasn’t with crypto. “What’s brought about the latest scandal isn’t crypto technology itself,” he said, adding that the blame lay with “loose governance, lax internal controls and the absence of regulation and supervision.”
He said that regulators in the U.S. and Europe have been urged to enforce the same rules for crypto exchanges as they do for banks and brokerages.
The recommendations have been pushed through the Financial Stability Board, a global organization tasked with the regulation of the digital asset industry.
Yanase added that countries “need to firmly demand” consumer protection measures from crypto exchanges. Demands were also laid down for money laundering prevention, strong governance, internal controls, auditing and disclosure for crypto brokerages.
Yanase made the comments while confirming that the Japanese subsidiary of FTX is expected to resume withdrawals starting in February.
“We have been in close communication with FTX Japan,” said Yanase, explaining that the “client’s assets have been properly segregated” from the subsidiary.
The U.S. court presiding over the FTX case agreed to the sale of FTX Japan, among other company subsidiaries. Last week, Cointelegraph reported that there were 41 parties interested in buying the Japanese branch of the exchange.
On Jan. 16, Monex CEO Oki Matsumoto said that they were interested in buying FTX Japan, adding that it would be a “very good thing” for the financial services company if there was less competition within the local market.
FTX Japan, one of the four FTX assets put on sale, caught the eye of Monex Group, an online brokerage firm based in Tokyo.
In an interview with mainstream media outlet Bloomberg, Monex CEO Oki Matsumoto said that they are interested and expressed that it will be a “very good thing” for them if there will be less competition within the local market.
Matsumoto also highlighted that the crypto market within Japan has a lot of potential because companies may be looking into investing in digital assets or using nonfungible tokens for their marketing campaigns.
According to the CEO, Monex wants to position itself as one of the few options for local players when such a time comes.
Monex also owns a majority of the Japanese Bitcoin wallet and exchange service, Coincheck and expressed its intent to list the crypto exchange on Nasdaq last year. According to Matsumoto, there are no changes in their plans to list Coincheck on the Nasdaq exchange.
FTX Japan is one of the four FTX assets approved to be sold amid the bankruptcy proceedings. Other assets include the stock-clearing platform Embed, the derivatives platform LedgerX and the Europe-based arm of the exchange, FTX Europe. The court allows those interested in buying to perform their due diligence and look into the assets for sale.
Monex is not the only firm eyeing the FTX asset. On Jan. 10, a court filing confirmed that there are around 117 entities that expressed their interest in purchasing the embattled exchange's assets. According to the information, 41 buyers are looking into FTX Japan.
This Daily Dose was brought to you by Cointelegraph.