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In a recent interview with Bloomberg, Mike Belshe, CEO of crypto exchange BitGo, stated that the market structure needs to improve before the U.S. SEC will grant approval for Bitcoin ETFs.

Mike Belshe, CEO of cryptocurrency exchange BitGo, has suggested that all indications are leaning towards a favorable outcome for a spot Bitcoin (BTC) exchange-traded fund (ETF). However, he emphasized that the journey ahead won't be without challenges.

In an interview with Bloomberg on November 16, Belshe explained that based on the discussions taking place between firms seeking Bitcoin ETF approval and the United States Securities and Exchange Commission (SEC), he holds an optimistic view that approval is imminent.

However, he pointed out that improving the market structure is a must before the SEC grants ultimate approval for a Bitcoin ETF:

“I think it is quite likely we have another round of ETF rejections before we get the positive news.”

Belshe reiterated the SEC's stance on separating crypto exchanges from custodians, emphasizing that this condition must be addressed before approvals are granted.

Furthermore, he referenced Sam Bankman-Fried, the former CEO of the now-defunct crypto exchange FTX, claiming that he was trying to make FTX a multifaceted operation:

“15 months ago we had Sam Bankman-Fried marching all over Washington D.C. advocating his seven key points of regulations. He basically said, let me take on all these functions, it is going to be great, it is going to be efficient."

This follows reports indicating that the excitement surrounding the potential approval of a spot Bitcoin ETF led to a significant surge in fees on the Bitcoin blockchain in recent times.

On November 16, the fees paid on the Bitcoin blockchain soared to $11.6 million, marking a 746% increase in the average transaction fee compared to a year ago.

According to Cointelegraph's market analysis, Bitcoin is holding steady near 18-month highs, surpassing its bear market trading range.

There are currently 12 asset management firms waiting to hear outcomes for Bitcoin ETF applications. According to Bloomberg analyst James Seyffart, there's a 90% chance of approvals by January 10, 2024.

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Alameda tried to redeem 3,000 wBTC days before bankruptcy: BitGo CEO

December 15, 2022 Coin Telegraph

Alameda Research

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.

During a Dec. 14 Twitter Spaces 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.

Full convo here. This part starts at 1:09:30. https://t.co/0KQg6bzd8k
— Chris Blec (@ChrisBlec) December 14, 2022

“[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, adding 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 failed mint transaction request of 3,000 wBTC in exchange for 3000 BTC. Source: wBTC Network Dashboard.*

Alameda’s attempt to unwrap the 3,000 wBTC was also confirmed on the Ethereum transaction aggregator Etherscan.

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 its parent firm eventually filed for Chapter 11.

wBTC is a tokenized version of BTC, which can be redeemed for BTC when it is sent to a burn address, triggeringthe release of BTC. The conversion is made at a 1:1 ratio.

The tokenization of wrapped Bitcoin enables Bitcoin holders to interact with Ethereum-based smart contracts and decentralized applications.

Bitgo co-developed wBTC in 2019 alongside blockchain interoperability protocol Ren and multi-chain liquidity platform Kyber. wBTC is also managed by the decentralized autonomous organization wBTC DAO, which comprises over 30 members.

The wBTC dashboard currently shows that BitGo now holds 202,255 BTC in custody against 199,238 wBTC in circulation, amounting to an overcollateralization rate of 101.51%.

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Mike Belshe

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