BitGo declined Alameda’s attempt to redeem 3,000 WBTC News ▸ FTX ▸ Bitcoin ▸ Bankruptcy
BitGo declined Alameda’s attempt to redeem 3,000 WBTC
BitGo CEO Mike Belshe said the firm declined the request because the Alameda representative that reached out failed the security verification process.
2 min read
Updated: Dec. 15, 2022 at 12:56 pm UTC
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BitGo CEO Mike Belshe revealed that the firm declined Alameda Research’s request to redeem 3,000 Wrapped Bitcoin (WBTC) a few days before its bankruptcy in a Dec. 14 Twitter space.
Belshe said BitGo declined the request because the Alameda representative that reached out to his firm failed the security verification process.
He added that BitGo is familiar with the representatives of all the firms that owned WBTC, and this representative from Alameda was not someone the custodian had interacted with before.
The person was also unfamiliar with the burn addresses, which was where the WBTC was sent to before the release of BTC used to back it.
Due to these reasons, BitGo paused the process to get clarifications from the trading firm. “While we were holding it, waiting for a response on those issues, they [Alameda] went bankrupt,” he added.
Onchain data shows that the redemption was initiated on Nov. 9, two days before FTX declared bankruptcy, and the transaction is still pending.
Although Alameda has already sent the 3000 WBTC to the burn address, BitGo is yet to approve the redemption request that would trigger the release.
This means that BitGo currently holds more BTC than the WBTC in circulation. Its dashboard shows that there are 199,238 WBTC against the 202,255 BTC in custody.
While Belshe disclosed the information to highlight BitGo’s security, it also shows the frantic attempts by those at FTX and Alameda to recover liquidity in the final days of the exchange.
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Wrapped Bitcoin
$66,036.62
Wrapped Bitcoin delivers the power of Bitcoin with the flexibility of an ERC20 token.
Alameda Research
Alameda Research was once a principal trading firm, operating as an arm of the failed crypto exchange, FTX.
BitGo
BitGo is a market leader in institutional-grade cryptocurrency investment services, providing institutional investors with security, compliance, and custodial solutions for blockchain-based currencies.
FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
Mike Belshe is a co-founder and CEO at BıtGo, an institutional-grade digital asset financial services company, headquartered in Palo Alto, California that was founded in 2013.