The CEO of BitGo, Mike Belshe, said that the company will not provide a quantity of bitcoin worth fifty million dollars to Alameda Research. An explanation for the occurrence was provided in a Twitter Space that was held by Chris Blec, who is a crypto MakerDAO delegate and the creator of Blec Report.
According to Belshe, someone from Alameda had contacted BitGo about unwrapping 3,000 wBTC, which is equivalent to $50 million, in order to reclaim bitcoin in the days leading up to the bankruptcy filing on November 11th.
Bitgo said no to the redemption request since it was out of the ordinary and had come from a representative of Alameda with whom they had never worked before. Bitgo Custodian was familiar with all of the operational people of each company that is an owner of WBTC.
Belshe confirmed that the Alameda representative did not pass its security verification process and that the representative was not familiar with wBTC burns. wBTC burns are the process in which wrapped bitcoin is redeemed for BTC by sending it to the burn address, which then triggers the release of the bitcoin that was used to mint it.
“While Bitgo were holding it, waiting for a response on those concerns, Alameda went bankrupt, and of course, once they went bankrupt, everything stopped,” Belshe continued. “While Bitgo were holding it, Alameda was waiting for an answer on those issues.”
Belshe praised BitGo’s management of the problem, citing it as proof of the company’s robust security infrastructure. According to him, the effort at redemption could have been legal, but it did not comply with the rules that had been created. Bitgo would not do anything with the 3,000 BTC that corresponds to the wBTC that is in issue. He said that he thinks the trustees who are conducting the Alameda bankruptcy proceedings will deal with the tokens.
In spite of this, Alameda made an effort to unwrap the 3,000 WBTC, and on-chain evidence from Etherscan verifies that on November 9th, 3,000 WBTC were sent from an Alameda wallet to the WBTC controller contract. After being sent to the burn address, the tokens have been rendered useless and are no longer in existence.
In a normal situation, BitGo would have redeemed 3,000 BTC to Alameda’s coffers; but, before releasing any bitcoin, it is required to authorize all redemption requests. On the WBTC dashboard, this redemption effort is still shown as pending; hence, WBTC is now overcollateralized by 3,000 BTC at this time.
Compiled by Coinbold