FTX, once the third largest cryptocurrency exchange, and its bankruptcy seriously affected the market. The collapse of FTX led to the decline of coins thought to be related to the stock market. Recently, Wrapped Bitcoin (WBTC) has also suffered from this situation. Here are the details…
FTX chaos also affected WBTC
After the chaos around the collapse of FTX in recent weeks, speculation is now widespread that Wrapped Bitcoin (wBTC) is losing its Bitcoin stable. cryptocoin.com As we have reported, wrapped Bitcoin indicates Bitcoins outside the BTC network. For example, to use Bitcoin in Ethereum’s DeFi ecosystem, it is necessary to create an ERC-20 token that represents it. This is Wrapped Bitcoin (WBTC), which aims to bring the value and liquidity of Bitcoin to the world of DeFi. WBTC is simply an ERC-20 token representing Bitcoin—one WBTC equals one BTC. A BTC can be converted to a WBTC and vice versa.
Rumors suggest that some wBTC is missing on BitGo as it is owned by Alameda Research. The BitGo team referred to the routine maintenance of the DAO multisig rotation. BitGo’s wBTC order book shows that under Bitcoin custody, it is slightly more than the total wBTC on the network. This means it has more Bitcoin (BTC) to support the number of wBTC issued.
Is wBTC affiliated with Alameda?
Kia Mosayeri, BitGo’s product manager, pointed to assets in the cold wallet for gaps in transaction flow. Contrary to speculation about its ties to Alameda Research, the bankrupt firm said it was not involved in the situation. The speculation started after Duo Nine, who claimed to be a technical analyst on Twitter, shared some data on wBTC holdings. He shared data that is currently irretrievable as Alameda is holding wBTC and has gone bankrupt.
A total of 72k #WBTC cannot be reclaimed by #Alameda investors, aka #FTX users, since they are both bankrupt!
Who exactly owns those 72k #BTC now? Are they even real?
What a mess. pic.twitter.com/X6GvM1EZBK
— Duo Nine | discord.gg/ycc (@DU09BTC) November 25, 2022
However, according to BitGo’s wBTC order book details, the firm claims to hold custody for 225,862 wBTC against a total of 235,452. This means that BitGo essentially overstocked around 10,000 BTC. The firm also has a dashboard with Bitcoin addresses controlled by the custodian. On the other hand, if the speculation turns out to be true, it means that Alameda Research may have sold its assets. Mosayeri said there were a lot of WBTC related FUDs and used the following statements:
WBTC redemptions are handled pretty well. Because the assets are in cold storage, there are intervals for arbitrage instead of a steady flow.
left wBTC constant
Meanwhile, the price of Wrapped Bitcoin (WBTC) is currently at 0.9836 BTC compared to the value of 1 Bitcoin it should hold. So, the depegging event marked a difference of about $250 between BTC-wBTC. According to the data, wBTC price dropped as low as $16,228 in the last 24 hours. At $16,442 at the time of writing. Bitcoin is at $ 16,581.
