BitGo Declines To Unwind 3,000 WBTC For Alameda

An unknown Alameda representative asked BitGo to redeem $50 million worth of wrapped bitcoin for BTC, but the digital asset custodian BitGo refused to let the company unwind it, according to Twitter Spaces hosted by crypto MakerDAO delegate and Chris Blec.

BitGo CEO Mike Belshe stated that someone from Alameda contacted BitGo about unwrapping 3,000 WBTC ($50 million) to reclaim bitcoin days before Alameda declared bankruptcy on November 11th.

Belshe noticed that the redemption request was odd because it was made by an Alameda representative whom BitGo has never seen before.

Additionally, He said that the Alameda representative failed the company’s security certification procedure and had no prior knowledge of the WBTC burns process, in which wrapped bitcoin is redeemed for BTC by sending it to the burn address, leading to the release of the bitcoin that was used to mint it.

Regardless, Alameda tried to unwind the 3,000 WBTC, and on-chain data from Etherscan confirms that 3,000 WBTC were sent from an Alameda wallet to the WBTC controller contract on November 9. Because the tokens were transferred to the burn address, they were essentially destroyed.

As usual, BitGo would have redeemed 3,000 BTC to Alameda’s coffers, but BitGo has to approve any redemption requests before any bitcoin is issued.

According to Belshe, the firm would not do anything with the 3,000 BTC that corresponds to the disputed WBTC. He also expects that the tokens will be handled by the trustees overseeing the Alameda bankruptcy process.

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