ALAMEDA TRIED TO REDEEM 3,000 WBTC DAYS BEFORE BANKRUPTCY: BITGO CEO

Last updated: June 20, 2025, 00:20 | Written by: Brian Armstrong

The collapse of FTX and the subsequent unravelling of Alameda Research sent shockwaves throughout the cryptocurrency world.As investigators and analysts continue to piece together the events leading up to the bankruptcy filing, new details are emerging that paint a clearer picture of the frantic scramble to salvage the situation. 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 Bitcoin (wBTC) in the days before FTX s bankruptcy filing on Nov. 11.One such revelation comes from Mike Belshe, the CEO of digital asset custodian BitGo, who recently confirmed that Alameda Research attempted to redeem a significant amount of Wrapped Bitcoin (wBTC) just days before the house of cards came crashing down.This move, involving 3,000 wBTC, worth approximately $50 million at the time, has raised numerous questions about Alameda's financial state and their desperate attempts to secure liquidity amidst mounting pressures.What exactly transpired during this attempted redemption?Why was the request ultimately denied? Mike Belshe, the CEO of digital asset custodian BitGo has confirmed that Alameda Research attempted to redeem 3,000 Wrapped Bitcoin (wBTC) in the days before FTX s bankruptcy filing on Nov. 11. During a Dec. 14 Twitter Spaces hosted by decentralized finance (DeFi) researcher Chris Blec, Belshe confirmed the firm knocked back the redemption request because [ ]And what does this incident reveal about the inner workings of Alameda Research in its final days? Alameda tried to redeem 3,000 wBTC days before bankruptcy: BitGo CEO PANews ｜ The CEO of Bitgo stated that the Alameda representative failed the security verification process required to convert wrapped-BTC into BTC.These are the questions we will explore as we delve into the details surrounding BitGo's refusal to unwind such a substantial amount of wBTC, shedding light on the crucial security measures that prevented a potentially larger financial fallout.

Alameda's Desperate Attempt to Secure Liquidity

In the tumultuous days leading up to FTX's bankruptcy filing on November 11th, 2022, Alameda Research was reportedly facing severe liquidity issues.As rumors of insolvency swirled, the company seemingly attempted to convert a significant portion of its holdings into more readily accessible assets. 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.The attempted redemption of 3,000 wBTC, as confirmed by BitGo CEO Mike Belshe, suggests a last-ditch effort to obtain funds and potentially cover liabilities.

The Timeline of Events

While the exact date of the attempted redemption remains somewhat unclear, Belshe's statement places it within the days immediately preceding the FTX bankruptcy.This timeframe is crucial as it indicates the urgency and potential desperation within Alameda Research as the crisis deepened.

It's important to understand that wBTC, or Wrapped Bitcoin, is an ERC-20 token on the Ethereum blockchain that represents Bitcoin. The CEO of Bitgo stated that the Alameda representative failed the security verification process required to convert Wrapped BTC into BTC.It's designed to bring the liquidity and value of Bitcoin to the Ethereum ecosystem, allowing users to participate in DeFi applications with a token pegged to the price of Bitcoin.Redeeming wBTC involves converting it back to the underlying Bitcoin it represents.

BitGo's Security Measures and the Failed Redemption

According to Mike Belshe, the CEO of BitGo, the attempt by Alameda Research to redeem the 3,000 wBTC ultimately failed due to a breakdown in the necessary security verification processes. Alameda tried to redeem 3,000 wBTC days before bankruptcy: BitGo CEO Alameda tried to redeem 3,000 wBTC days before bankruptcy: BitGo CEO. December 19This reveals the robust security protocols that BitGo had in place, preventing a potentially disastrous transaction from going through.

What Went Wrong with the Verification Process?

Specific details surrounding the failed verification process haven't been extensively publicized. Mike Belshe, the CEO of integer plus custodian BitGo has confirmed that Alameda Research attempted to redeem 3,000 Wrapped Bitcoin (wBTC) successful the days earlier FTX s bankruptcy filing connected Nov. 11.However, Belshe's statement implies that the representative attempting the redemption on behalf of Alameda Research was unable to adequately fulfill the requirements necessary to prove their legitimacy.Some potential reasons for this failure could include:

Incomplete Documentation: The Alameda representative may have failed to provide the necessary documentation to verify their identity or authorization to make the redemption.
Security Protocol Violations: They might have deviated from established security protocols, raising red flags within BitGo's system.
Compromised Credentials: It's possible that the credentials used for the attempted redemption were compromised or flagged as suspicious.

Regardless of the specific reason, BitGo's security measures effectively prevented the unauthorized conversion of $50 million worth of wrapped Bitcoin.This demonstrated a critical safeguard within the digital asset ecosystem during a time of intense market instability.

The Significance of BitGo's Refusal

BitGo's decision to deny the wBTC redemption request has far-reaching implications, highlighting the importance of robust security measures within the digital asset custody sector.

Preventing Further Financial Contagion

Had BitGo approved the redemption, it's possible that the 3,000 BTC would have been used to further obscure Alameda's financial situation or potentially prop up failing entities within the FTX ecosystem.By refusing the transaction, BitGo arguably prevented additional assets from being drawn into the impending collapse and potentially lessened the impact on other market participants.This underscores the critical role custodians play in safeguarding digital assets and maintaining market integrity.

Reinforcing Trust in Wrapped Assets

The incident also serves as a testament to the security and reliability of wrapped assets like wBTC.Despite the turmoil surrounding Alameda Research and FTX, BitGo's actions demonstrated that the underlying mechanism for converting wBTC back to Bitcoin remained secure.This helps build confidence in the overall concept of wrapped assets as a way to bridge the gap between different blockchain ecosystems.

Questions and Answers About Wrapped Bitcoin (wBTC)

Let's address some common questions related to wBTC and its role in the digital asset space:

What is Wrapped Bitcoin (wBTC)?

Wrapped Bitcoin (wBTC) is an ERC-20 token on the Ethereum blockchain that represents Bitcoin.Each wBTC token is backed by one Bitcoin held in custody by a qualified custodian, like BitGo.It allows Bitcoin holders to participate in the Ethereum DeFi ecosystem without having to sell their Bitcoin.

How does wBTC work?

The process involves a custodian holding Bitcoin in a reserve and issuing an equivalent amount of wBTC tokens on the Ethereum blockchain.When a user wants to redeem their wBTC for Bitcoin, the tokens are burned, and the corresponding Bitcoin is released from the reserve.

Who is responsible for maintaining the wBTC reserve?

Qualified custodians, such as BitGo, are responsible for maintaining the Bitcoin reserve that backs wBTC. 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 Bitcoin (wBTC) in the days before FTX s bankruptcy filing on Nov. 11.These custodians are required to undergo regular audits to ensure the accuracy and security of the reserve.

What are the benefits of using wBTC?

Some benefits include:

Access to DeFi: Allows Bitcoin holders to participate in Ethereum-based DeFi applications, such as lending, borrowing, and yield farming.
Increased Liquidity: Provides increased liquidity for Bitcoin by making it accessible on the Ethereum blockchain.
Faster Transactions: Ethereum transactions are typically faster and cheaper than Bitcoin transactions.

What are the risks associated with wBTC?

Some risks include:

Custodial Risk: The security of wBTC relies on the custodian holding the Bitcoin reserve.If the custodian is compromised, the wBTC could be at risk.
Smart Contract Risk: wBTC relies on smart contracts, which could be vulnerable to bugs or exploits.
Regulatory Risk: The regulatory landscape for wrapped assets is still evolving, and there is a risk that wBTC could be subject to regulatory scrutiny.

The Broader Implications for the Crypto Industry

The Alameda Research incident and BitGo's role in preventing the wBTC redemption highlight several key takeaways for the cryptocurrency industry as a whole:

The Importance of Custodial Security

The security of digital assets held in custody is paramount.BitGo's actions demonstrate the critical importance of implementing robust security measures, including strict verification processes, to prevent unauthorized access and protect against potential fraud or misuse.

The Need for Transparency and Accountability

The lack of transparency and accountability within Alameda Research and FTX contributed to their downfall.The industry needs to prioritize transparency and implement robust governance structures to prevent similar incidents from occurring in the future.Regulators are now pushing for greater oversight of the crypto industry.The CFTC lawsuit against SBF, FTX and Alameda underscores the growing pressure for greater accountability.

The Growing Role of Regulation

The events surrounding FTX and Alameda Research have amplified calls for increased regulation of the cryptocurrency industry. 45 votes, 45 comments. 7.1M subscribers in the CryptoCurrency community. The leading community for cryptocurrency news, discussion, and analysis.Regulators are likely to focus on areas such as consumer protection, market manipulation, and financial stability. Mike Belshe, the CEO of digital asset custodian BitGo has confirmed that Alameda Research attempted to redeem 3,000 Wrapped Bitcoin (wBTC) in the days before FTX s bankruptcy filing on Nov. 11. During a Dec. 14 Twitter Spaces hosted by decentralized finance (DeFi) researcher Chris Blec, Belshe confStricter regulations are on the horizon for the cryptocurrency industry to offer more protection for average retail investors.

Learning from the Alameda Research Debacle

The collapse of Alameda Research and FTX serves as a stark reminder of the risks associated with investing in the cryptocurrency market. Mike Belshe, the CEO of digital asset custodian BitGo has confirmed that Alameda Analysis tried to redeem 3,000 Wrapped Bitcoin (wBTC) within the days earlierIt's crucial for investors to conduct thorough due diligence before investing in any digital asset and to understand the risks involved.Diversification and risk management are essential strategies for navigating the volatile crypto landscape.

Actionable Steps for Crypto Investors

Here are some actionable steps that crypto investors can take to protect themselves:

Do Your Own Research (DYOR): Before investing in any cryptocurrency or project, conduct thorough research to understand the technology, the team, and the risks involved.
Diversify Your Portfolio: Don't put all your eggs in one basket. Scan this QR code to download the app now. Or check it out in the app stores Home; PopularDiversify your portfolio across different cryptocurrencies and asset classes to reduce risk.
Use Reputable Exchanges and Custodians: Choose exchanges and custodians with a proven track record of security and transparency.
Secure Your Private Keys: Store your private keys in a secure location, such as a hardware wallet, and never share them with anyone.
Stay Informed: Keep up-to-date with the latest news and developments in the cryptocurrency market.

Conclusion: Lessons Learned and Moving Forward

The attempted redemption of 3,000 wBTC by Alameda Research in the days leading up to the FTX bankruptcy is a significant detail in the unfolding saga.Thanks to the robust security protocols of BitGo, the transaction was blocked, potentially preventing further financial damage. [ad_1]Mike Belshe, the CEO of digital asset custodian BitGo has confirmed that Alameda Research attempted to redeem 3,000 Wrapped Bitcoin (wBTC) in the days before FTX s bankruptcy filing on Nov. 11. During a Dec. 14 Twitter Spaces hosted by decentrThis incident underscores the critical importance of secure custodial practices, transparency, and accountability within the cryptocurrency industry. Mike Belshe, the CEO of digital asset custodian BitGo has confirmed that Alameda Research attempted to redeem 3,000 Wrapped Bitcoin (wBTC) in the days before FTX s bankruptcy filing on Nov. 11.As the industry moves forward, it's essential to learn from the mistakes of the past and prioritize measures that protect investors and maintain market integrity. Mike Belshe, the CEO of digital asset custodian BitGo has confirmed that Alameda Research attempted to redeem 3,000 Wrapped Bitcoin Alameda tried to redeem 3,000 wBTC days before bankruptcy: BitGo CEOThe future of cryptocurrency depends on building a more secure and transparent ecosystem that fosters trust and innovation.By prioritizing security, transparency, and responsible innovation, the cryptocurrency industry can move forward and realize its full potential. 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 attemptedNow, more than ever, it's crucial to be informed, be cautious, and be prepared to navigate the complexities of this evolving landscape.