It’s an episode that could almost make you smile if it weren’t part of the general post-FTX crash debacle and its hundreds of thousands of victims: the liquidators in charge of recovering what remains of the exchange’s funds got themselves… liquidated on the decentralized platform AAVE while trying to recover various cryptocurrencies.
In search of the lost treasures of FTX, profession: liquidator
If when they say “liquidator”, the image of a bald guy in a perfectly fitting suit, impassive and silent, screwed to the gun, comes to you spontaneously, it is not useless to make a quick reminder.
In bankruptcy, or more specifically in the FTX Exchange filing for Chapter 11 protection in New York Bankruptcy Court, a phase of liquidation it is usually neat.
It will consist for its authorizing officers in the search, sorting and liquidation of assets – most often financial, but also real estate or assets – of the company concerned. In other words, the exercise will consist in making potentially illiquid and often dispersed assets “liquid”, ie easily available, under the control of the liquidators.
These reserves, once well established, will allow, after lengthy administrative and legal procedures, the eventual reimbursement of injured creditors, partners and customers.
And before tackling the dumpling of the day, a tribute is in order: FTX’s liquidators work quickly and quite well, so much so that yesterday we learned that almost 5 billion dollars had already been recovered.
A sum that is both well below the alleged damage, but potentially sufficient to give a glimmer of hope to the victims of a disaster whose main instigator still continues to blame others (in mess, bad luck, Binance, leverage, karma…).
>> Don’t trust platforms to keep your cryptocurrencies? Ledger has the solution (commercial link) <
Liquidated the liquidator
Anyone who has ever ventured into the exciting but wild territory of Decentralized Finance knows it: danger is everywhere, but the real danger lies in the liquidation risks associated with borrowing/lending mechanisms on decentralized platforms with relentless rules.
Well understood and mastered, these tools are still extremely effective, but can quickly backfire on the investor who is giddy or uncomfortable with the rules in place, as seems to be the case with the FTX liquidator woe.
Continuing their mission to repatriate as many funds as possible, they have in fact sought to close a position on the DeFi platform AAVE, in order to recover the collateral. Unfortunately, those directly involved got their hands on decentralization, starting with the cancellation of the additional guarantees necessary for the security of the position, which quickly found itself liquidated… twice in one week for a total of just over 4 BTC (in aWBTC tokens).
It should be noted that the liquidators also tried to recover a large amount of LDO tokens, without realizing that the latter were blocked (“vested”). After 9 (!) successive attempts, a small amount transaction was validated. Note that all transactions appear on the liquidator’s wallet, which is currently stocked with approximately $20 million in ETH and $140 million in various tokens.
The ravioli of the day reminds us how much, even for finance professionals, cryptocurrencies in general and DeFi in particular remain complex and dangerous sectors. A good reason to continue training and learn about Le Journal du Coin, and why not go and take advantage of one of the 6 essential crypto conferences of 2023!
In cryptocurrency, do not save on prudence! So, to keep your crypto assets safe, your best bet is still a personal hardware wallet. To the ledger, there is something for all profiles and all cryptocurrencies. Don’t wait to secure your capital (trade link)!