The CEO of Bitgo stated that the Alameda representative failed the security verification process required to convert wrapped-BTC into BTC.
Mike Belshe, the CEO of digital asset custodian BitGo, has confirmed that Alameda Research attempted to redeem 3,000 wrapped bitcoins (wBTC) in the days before FTX’s bankruptcy filing on Nov. 11.
During a Dec. 14 Twitter chat hosted by decentralized finance (DeFi) researcher Chris Blec, Belshe confirmed the firm knocked back the redemption request because the unknown Alameda representative involved didn’t pass Bitgo’s security verification process and seemed unfamiliar with how the wrapped-Bitcoin burning process worked.
“[The security details] didn’t match the process.” So we held it up and we said, “No, no, no, no.” This is not what the burn looks like. “And we need to know who this person was.”
“So we held it, and while we were holding it, waiting for a response on those issues, [Alameda] went bankrupt, and of course, once they went bankrupt, everything halted,” Belshe added.
The Bitgo CEO also said that Alameda’s 3,000 BTC mint request remains “stuck” on the platform’s dashboard and added that the firm would most likely leave the tokens where they are until they’re dealt with by the trustees taking on Alameda’s bankruptcy case.
Alameda’s attempt to unwrap the 3,000 wBTC was also confirmed on the Ethereum transaction aggregator Etherscan.
However, while this would have ordinarily triggered the redemption of BTC, Bitgo has a security mechanism set in place before the conversion takes place, which is what Alameda failed.
It is not understood what the motive was for attempting to redeem the $50 million worth of wBTC, but it is understood that FTX executives were attempting to raise funds from a variety of sources to stave off bankruptcy up until the last minute.
Analysis from Arkham Intelligence on Nov. 25 found that Alameda pulled $204 million from eight different addresses from FTX US five days before the firm eventually filed for Chapter 11.
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