An arbitrage opportunity arises when the price of an asset is quoted differently on various exchanges/venues due to local price dislocations. Amid a laser-like focus on the FTX hacker’s moves, a number of arbitrageurs are trying to earn a tidy profit by anticipating the black hat hacker’s next gambit. We noted in a previous post that FTX suffered a $600 million hack soon after filing for bankruptcy. As per the blockchain analysis firm Nansen, FTX International and FTX US saw $659 million in unauthorized outflows.
— PeckShieldAlert (@PeckShieldAlert) November 15, 2022 As of the 15th of November, the FTX hacker’s wallet held 228,523.83 Ether coins, equating to a little under $300 million and constituting the 35th largest global stash of Ether coins. Since then, however, the FTX hacker has been steadily dumping his gigantic Ether stash. The Twitter account @Lookonchain has now composed a detailed thread, illustrating the variety of ways in which arbitrageurs are trying to take advantage of this situation.
His exchange path is ETH → WBTC → renBTC. So arbitrageurs can profit by exchanging renBTC for WBTC. 1.🧵 Let’s see how arbitrageurs make money from renBTC → WBTC. pic.twitter.com/UX4GZjPbHv — Lookonchain (@lookonchain) November 21, 2022 A few hours back, the FTX hacker swapped 50,000 Ether coins for 3,517 renBTC, a synthetic representation of Bitcoin on the Ren protocol.
Fund address: 0x66b870ddf78c975af5cd8edc6de25eca81791de1 After noticing that FTX Accounts Drainer sold ETH for renBTC, he minted renBTC and exchanged it for WBTC. He exchanged 99.8 $renBTC for 102 $WBTC and made a profit of about 2 $BTC($32K) in only one transaction. pic.twitter.com/TNNcikEKx8 — Lookonchain (@lookonchain) November 21, 2022 While detailing various arbitrage exploitation attempts, the Twitter account @Lookonchain highlighted a trader who minted 99.8 renBTC and then exchanged it for 102 wBTC (Wrapped Bitcoin on Ethereum). This trader made a profit of around 2 BTC or roughly $32,000 in a single trade. This trader currently owns 255 renBTC and is likely anticipating another bout of purchase from the FTX hacker to drive up the price of renBTC.
dubstepnerd.eth: 0xa00b0540f43e00a634d016a31b0a39d95170e6bf He minted 140.33 $renBTC and converted it into 143.2 $WBTC, making a profit of about 2.8 $BTC($45K). Then he minted 80.94 $renBTC again to wait for FTX Accounts Drainer to sell $ETH for $renBTC. pic.twitter.com/Jeq0RxPPPM — Lookonchain (@lookonchain) November 21, 2022 Similarly, another trader minted 140.33 renBTC coins and then swapped them for 143.2 wBTC coins, earning a profit of 2.8 BTC or roughly $45,000. Judging from the wallet’s elevated holdings of renBTC, this trader is also expecting the FTX hacker to buy more renBTC coins.
FTX Accounts Drainer is dumping ETH for renBTC via a new wallet!https://t.co/b1qR53EReC pic.twitter.com/lvO7Po9nQz — Lookonchain (@lookonchain) November 21, 2022 Just moments back, the FTX hacker again bought more renBTC coins. This indicates that the demand for renBTC coins from arbitrageurs will remain strong as long as this trend is expected to continue.
Or you can short $ETH on #Binance immediately when FTX Accounts Drainer sells $ETH, and close your position when FTX Accounts Drainer stops selling. Because when FTX Accounts Drainer dumped ETH yesterday, the price of ETH fell from $1,220 to $1,165, a drop of 4.5%. pic.twitter.com/Oz4SKDra9X — Lookonchain (@lookonchain) November 21, 2022 Nonetheless, for unsophisticated investors, who might find establishing this trade a daunting task, an easier alternative would be to short Ethereum as soon as the FTX hacker begins to sell some of Ether stake and then close this short position once the black hat hacker ends the latest liquidation bout. Of course, readers should note that arbitrage exploitation is extremely risky and demands agility as well as lightning reflexes.
