Orthogonal Credit alleged key weaknesses in Alameda’s due diligence early in 2022

Orthogonal Credit, an arm of the digital asset hedge fund Orthogonal Trading, disclosed on Nov. 9 that it pushed to close Alameda Research’s dedicated borrower pool on Maple Finance in the second quarter of 2022 after identifying “key weaknesses” in its due diligence. 

The company announced on Twitter that it had identified a number of key weaknesses while conducting due diligence earlier this year — specifically, declining asset quality and unclear capital policy, among other factors.

The assessment led the firm to push Maple Finance to halt Alameda loans in May, after issuing $288 million in loans in a pool dedicated to Alameda during November 2021 and May 2022.

“We considered these key weaknesses and made a commercial decision to sever our institutional lending relationship. Not a decision we took lightly but a necessary part of proactive risk management,” said the company in the thread.

Further, we actively pushed to close the Alameda dedicated borrower pool on @maplefinance during 2Q22. Exposure to FTX is limited across our borrowers in USDC01. (2/x)

— Orthogonal Credit (@OrthoCredit) November 9, 2022

Maple is a decentralized finance credit platform that claims to hold 50% of the institutional crypto lending market based on the total volume of loans outstanding. The platform has issued over $1.8 billion in loans since May 2021. Speaking to Cointelegraph on the sidelines of the Converge22 conference in San Francisco in September, Maple Finance co-founder and CEO Sid Powell said that transparency has been the saving grace of decentralized finance during the prolonged crypto market downturn.

M11 Credit, another Maple delegate, also denied having existing loans to Alameda Research. “We are pleased to see the majority of our counterparties actually front-ran and took swift action over the weekend and cut exposure by proactively withdrawing assets from FTX,” the company tweeted.

Scope Protocol released an analysis on Nov. 9 of Alameda’s on-chain status after reviewing data for 643 addresses on different chains. According to it, Alameda has $310 million worth in Ethereum positions and assets and $200 million on Solana (excluding low liquidity assets).

This is probably the most detailed analysis of #Alameda’s on-chain status:

We pull a total of 643 #Alameda’s addresses data on different chains.

Right now, they have $310M in EVM positions and assets, $200M on Solana (excluding low liquidity assets)

A breakdown:

— 0xScope (@ScopeProtocol) November 9, 2022

The company has assets and positions in other 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.

As one of Sam Bankman-Fried’s entities, Alameda has been in the spotlight since it was revealed Binance had considered acquiring global crypto exchange FTX during its ongoing liquidity crisis.