A New Claim Emerged Regarding Bitcoin’s 87 Percent Drop in 2021: Alameda Research is at the Center of the Incident

A former employee of Alameda, which declared its bankruptcy alongside FTX’s collapse, claims that a trader in the company entered a wrong decimal number, leading to an 87% drop in Bitcoin on Binance.US in 2021.

A striking claim came from a former employee of Alameda Research, which declared its collapse along with FTX. At the center of the mentioned incident is a mistake made through Alameda Research.

In October 2021, on the cryptocurrency exchange Binance.US, the price of Bitcoin temporarily dropped by 87% within a few minutes. After the incident, there was widespread panic, but after a while, the prices of altcoins that fell along with Bitcoin had almost returned to their previous levels.

A Binance.US spokesperson had stated that this sudden drop resulted from a mistake in the trading systems of one of the “institutional traders,” but for a long time, it was unclear who this person was. That was until a former Alameda Research employee, Aditya Baradwaj, made some claims about the incident.

Claims of Aditya Baradwaj

According to Aditya Baradwaj’s tweets, the price drop was due to a mistake made by Alameda Research’s algorithms. Baradwaj claims that during manual trading, a trader entered a wrong decimal point, and this error led to a significant price drop. Because of the missing decimal point, the trader sold Bitcoin at a much lower price.

“This incident happened just a few weeks after I joined Alameda. I had just gotten a hang of our engineering workflows and was starting to wrap my head around our trading systems.” Baradwaj explained, narrating the incident as follows:

”At a high level, Alameda’s trading operated in two modes: The main one was our semi-systematic strategies, where traders set model parameters that control a complex automated trading system. However, sometimes manual operations are also necessary.

On October 21, 2021, there was a significant disruption in the market. A trader from Alameda tried to sell a block of BTC through our manual trading system. But they made a mistake during the input: By placing the comma in the wrong spot, they sold BTC far below the current market price, at just a few cents in dollar terms. Because of this error, the price of BTC on some exchanges plummeted from $65,000 to $8,000. Fortunately, arbitrators noticed this price difference quickly and acted swiftly to restore the price to normal.”

Aditya Baradwaj.

Such mispricings created a great opportunity for arbitrage traders, who quickly acted and pulled the Bitcoin price back to normal levels. However, this incident resulted in a significant cost for Alameda Research. At that time, it was stated that the company’s loss was around tens of millions of dollars.

Previous Article

The Number of Arrests on JPEX Exchange Increased to 11 and Access to the Exchange was Blocked

Next Article

Post.Tech Sees Rising Volumes, Rivaling Friend.Tech

Related Posts
Read More

What is FUD?

FUD (Fear, Uncertainty, and Doubt - Fear, Uncertainty and Doubt), a term we often encounter in the cryptocurrency world, plays an important role in its influence in the cryptocurrency markets. So what is FUD and how does it work? In this article, we will examine the impact and importance of FUD in the cryptocurrency markets.