Wrapped Bitcoin (wBTC), pegged 1:1 to Bitcoin (BTC), is actively snatching news media headlines. The world-famous FTX-Alameda debacle’s domino effect is rumored to be catching-up with wBTC.
Investors and analysts have begun voicing their concerns over the current and future state of wBTC, as it depegs a bit (reportedly for 14 days now). They term the wBTC depeg to be a consequential domino effect of the Alameda Research bankruptcy.
Launched in 2018, wBTC’s all-time high peak price point is at $69,166, on November 10, 2021, as per CryptoRank. From that peak price point, wBTC has fallen -76.3%; whereas its all-time low has been $4,366.
Highlighting the issue in question, CryptoRank tweeted:
Alameda Research, apparently, is the largest mint of wBTC (to the tune of over 100,000 wBTC). The BTC / wBTC depeg is $0.993, as is apparent via the picture above, whereas wBTC is trading for $16,427 (+0.78%), at press time.
Now, you might be wondering what actually brings the Alameda Research debacle in the midst of all these, right? Well, it is actually not even relevant; Kia Mosayeri, product manager, BitGo, reveals, via a series of tweets:
Kia explains wBTC redemptions are processed appropriately. The intervals exist solely owing to wBTCs being in cold storage. The wBTCs are amidst a routine maintenance of DAO multisig rotation (ensuring active memberships), safe and secured in the BitGo Trust.
He ensures redemptions are initiated as scheduled, independent of the said rotation. Kia specifically mentions Alameda Research is absolutely “irrelevant.” He reiterates wBTC follows double entry accounting, wherein, claiming on assets as well as liabilities is not at all possible.
Lastly, Kia shares a proof of reserves for the underlying BTC (one that is transparent, having a gold standard). Live tracking of WBTC (an ERC20 token) is also available for self-audit.
As per BitGo’s wBTC order book, Bitcoin in custody is slightly higher than the total wBTC in the network. Safe to say that this means having more Bitcoin (BTC) in existence than the issued wBTC (supporting the latter).
Rest assured, BitGo, as a custodian, also offers insurance to the tune of $250,000, beyond which, a 1% annual fee is payable.
