Crypto custodian BitGo has been nominated as the official custodian to safeguard the remaining funds at FTX. Acting CEO John Ray III selected BitGo to take custody of the assets of the crypto exchange for the duration of the bankruptcy proceedings.
FTX filed a motion to acquire a custodian in relation to the bankruptcy process on Nov. 23. A hearing is scheduled for Dec. 16 to confirm the appointment. Co-Founder of BitGo, Mike Belshe commented,
BitGo’s mission is to “deliver trust in digital assets” – and crypto needs that more than ever. By helping in this case, we intend to do our part to restore trust our industry.”
Further, Belshe remarked, “when you break down FTX subsidiaries, the ones that used BitGo products are solvent and safe. The ones that didn’t, aren’t.”
BitGo custody services
BitGo is one of the major players within the crypto custody sector, holding assets on behalf of many institutional investors, banks, and crypto exchanges. Clients include Panterra Capital, Swissborg, Coinjar, Ripple, Nexo, and many others.
As well as custody services, BitGo offers trading, staking, wallet services, portfolio management, and Bitcoin settlement. Further, it has custody of roughly 30% of all crypto held by centralized exchanges.
It also has custody of the Mt. Gox Bitcoin, which was hacked in 2014, ceased trading, and filed for bankruptcy. Creditors selected BitGo as the sole custodian of Mt. Gox assets. The Bitcoins are being held on behalf of customers who had their Bitcoin locked into the exchange, a similar situation to the one currently ongoing at FTX.
BitGo’s Co-Founder had strong words about former FTX CEO Sam Bankman-Fried,
“SBF committed financial fraud, this is not a crypto issue but a market structure issue. Trading, financing, and custody need to be different. BitGo has been advocating that for years, and it’s time to start making it a reality for the good of crypto.”
BitGo’s Head of Marketing, Ping Chen, spoke exclusively to CryptoSlate regarding the status of the crypto custodian. Amid widespread fear, uncertainty, and doubt in the crypto industry, BitGo
Chen was incredibly proud of what BitGo has achieved, commenting that “we’ve done everything right” and “I’m so proud to be here.” She also noted that BitGo is “one of the few regulated independent custodians.”
The company also has a ‘qualified custody’ license meaning that client assets are “bankruptcy remote.” Chen remarked, “even if BitGo burns to the ground…we operate like a bank… it is never comingled and never moved unless you, as the owner, determine where it goes.” Belshe added,
“SBF proved that there is no such thing as a “safe” conflict of interest. Trading, financing, and custody need to be different. BitGo has been advocating that for years, and it’s time to start making it a reality for the good of crypto.”
Not all custody is created equal.
BitGo is licensed in South Dakota, New York, Switzerland, and Germany, and, as Chen confirmed, “because we have a license, it is audited.”
“Not all custody is created equal. There’s not another peer that is doing what we’re doing right now.”
Chen remarked that “we are one of the most secure and reliable custodians for any institution” due to the qualified custodian status, multiple licenses, diligent internal risk management, and a lack of “conflict of interest.”
In a further seal of approval, BitGo is the custodian for wallets in El Salvador and has recently confirmed a partnership with Nike in relation to its new NFT initiative.
Talking about the current market climate, Chen asserted that “we have a very healthy balance sheet.” However, a recent Forbes article claimed that BitGo was seeking investment amid market turmoil and a failed acquisition from Galaxy.
Chen confirmed that the reason for the breakdown in the Galaxy deal was solely due to a decision by the SEC not to allow Galaxy to be listed on the New York stock exchange. It was nothing to do with the business practices at BitGo. Further, Chen remarked, “Galaxy is still an investor in BitGo and has access to all of our financials.”
“The truth of the matter is since we are no longer in talks with Galaxy we are now open to pursuing other opportunities. This started in August.”
Retail facing custody
Further, concerning potential new investments in BitGo, Chen stated, “we are entertaining these things, but it has nothing to do with what is happening now.”
In an exciting announcement for non-institutional investors, BitGo also confirmed that “we are looking to scale operationally to make products available to investors who hold less than 1BTC.”
Custodial services of the nature of BitGo are not usually accessible to ordinary investors. Therefore, the news of BitGo opening institutional-grade custodial services for retail crypto holders will be welcomed by those whose faith has been rocked by recent events.