To recap, wBTC is a tokenised version of bitcoins in other blockchains. wBTC can be exchanged for "original" coins at a 1:1 ratio. To do so, the tokens need to be sent to a special address for burning. wBTC as tokenised bitcoins can be sent on the Ethereum blockchain and other networks to interact with various decentralised finance platforms.

Who tried to take money from Alameda?

Here’s how Belsch described BitGo’s interaction with the mysterious Alameda representative. His retort is cited by Cointelegraph.

The security procedure did not follow the process. So we accepted the tokens and responded by rejecting them, as that’s not how the procedure for burning them should happen. We needed to find out exactly who was trying to withdraw the coins. While we were holding the crypto, waiting for a response to our requests, Alameda went bankrupt and, of course, the transaction did not take place.

Note that Alameda Research representatives in general are not used to undergoing any kind of vetting. As it turned out the day before, they had special trading conditions on the FTX cryptocurrency exchange, which in this case acted as the company's partner. In particular, the Alameda account was exempted from going through various basic security procedures, such as verifying that the account had sufficient funds to conduct a particular transaction. As a result, the company's transactions on FTX were faster than those of other users of the crypto-exchange.

The application to burn tokens is still hanging on BitGo’s website

That means BitGo as a custodian still has 3 thousand BTC equivalent of $51.84 million at today’s exchange rate, which technically belongs to Alameda. The company is already bankrupt, so BitGo management simply doesn’t know who exactly to hand over the coins to. Belsch clarified that the bitcoins will remain with BitGo until arbitrators in the Alameda bankruptcy court case decide what to do with them.

Having BitGo as an intermediary in the process of exchanging wBTC for BTC helped keep almost $50 million in crypto safe. Generally, you don’t need a custodian for this process – it can be done on its own, simply by interacting with smart contracts. However, in this case BitGo was asking for additional confirmation of the transaction, as large cryptocurrencies handle large sums.

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There is another interesting detail in the case of Alameda Research founder Sam Bankman-Friede: his numerous donations to various parties in the US political arena. For example, Sam was an active lobbyist for US President Joe Biden’s election campaign, according to Decrypt. However, White House officials have so far declined to comment on questions about whether numerous politicians – including Biden himself – will return the funds donated by Bachmann-Friede.

Sam in top donors for US Senate election in 2022

In response to questions about the status of Sam’s millions of dollars in political donations – perhaps even stolen client funds – White House press secretary Karin Jean-Pierre said she was forbidden to publicly discuss the subject or the president’s views on it because of the provisions of the Hatch Act of 1939. Here’s her rejoinder.

I am subject to the Hatch Act. I’m happy to say it over and over again because we believe in the rule of law here.

White House press secretary Carine Jean-Pierre

The Hatch Act, signed into law by President Franklin Roosevelt, was primarily designed to prevent unelected members of the US executive from making overt political statements. Most of the historical violations of the law involved heads of federal agencies supporting political candidates or attempting to run for political office themselves.

Notably, the president and vice president are completely exempt from the Hatch Act, since both politicians are elected officials who regularly support candidates and participate in party politics. It is therefore unclear how the clarification of President Biden’s views on donations made by FTX and Alameda in light of his founder’s recent arrest could be a direct violation of the law.


We believe this development can be considered a happy coincidence for the creditors of Alameda Research and the FTX exchange at the same time. Still, the additional tens of millions of dollars will make it somewhat easier to recover customer funds. And while the companies' total liabilities amount to several billion dollars, the chances of creditors getting their money back more quickly have somehow increased a little.


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