BitGo CEO Mike Belshe revealed that Bitgo refused to release $50 Million Worth BTC to Alameda Research. The incident was explained in a Twitter Space hosted by crypto MakerDAO delegate and founder of Blec Report, Chris Blec.
Belshe stated that someone from Alameda approached BitGo about unwrapping 3,000 wBTC ($50 million) to recover bitcoin days before the bankruptcy filing on November 11th.
Bitgo refused the redemption request as it was unusual, it came from an Alameda representative that they had not dealt with previously. Bitgo Custodian knew all operative personnel of each firm that owns WBTC.
Belshe confirmed that the Alameda representative did not pass its security verification process and was not familiar with wBTC burns, 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 issues, Alameda went bankrupt, and of course, once they went bankrupt, everything halted,” Belshe added.
Belshe lauded BitGo’s handling of the situation as evidence of the company’s strong security apparatus. He said that the redemption attempt could have been legitimate but did not meet established protocols. Bitgo will not do anything with the 3,000 BTC that corresponds to the wBTC in question, adding that he expects the tokens will be dealt with by the trustees handling the Alameda bankruptcy proceedings.
Regardless, Alameda attempted to unwrap the 3,000 WBTC, and on-chain evidence from Etherscan confirms that 3,000 WBTC were paid from an Alameda wallet to the WBTC controller contract on November 9th. The tokens were sent to the burn address and have effectively been destroyed now.
Generally, BitGo would have redeemed 3,000 BTC to Alameda’s coffers, but it must authorise all redemption requests before releasing any bitcoin. This redemption attempt is still marked as pending on the WBTC dashboard, and WBTC is thus currently overcollateralized by 3,000 BTC.
