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Orthogonal Credit Saw ‘Key Weaknesses’ in Alameda Research – Unclear Capital Policy.


Orthogonal Credit, a unit of digital asset hedge fund Orthogonal Trading, had identified key weaknesses in Alameda Research, Sam Bankman-Fried’s trading firm, earlier this year. As such, it decided to close Alameda Research’s dedicated borrower pool on Maple Finance in the second quarter of 2022.

Orthogonal Credit said the key weaknesses included declining asset quality and unclear capital policy. This prompted the firm to stop Alameda’s loans on Maple Finance in May. Orthogonal Credit issued $288 million worth of loans in a pool dedicated to Alameda between November 2021 and May 2022.

The company tweeted that it took the issues forward and made a commercial decision to sever its institutional lending relationship. Orthogonal Credit says the decision was a necessary part of proactive risk management. Moreover, it actively pushed to close the Alameda dedicated borrower pool on Maple Finance in 2022. Maple Finance, a DeFi credit platform, holds 50% of the institutional crypto lending market based on the total volume of loans outstanding. Since May 2021, it has issued over $1.8 billion worth of loans.

M11 Credit, a Maple delegate, said it doesn’t have existing loans to Alameda Research. It said the majority of their counterparties took swift action over the weekend. They cut exposure by proactively withdrawing assets from FTX.

Furthermore, Scope Protocol analysis suggests that Alameda Research has $310 million worth of Ethereum positions and assets and $200 million on Solana. It pulled a total of 643 Alameda’s address data on various chains. Alameda Research has assets and positions in Ethereum Virtual Machine compatible chains, including $12 million at Arbitrum, $7.5 million at Aurora, $6.3 million at Avalanche, $6 million at BNB Chain, and $1.4 million at Moonbeam.

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