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 to 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 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 provides custody services for over 35% of all crypto 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.”
The company also has a ‘qualified custody’ license meaning that client assets are “bankruptcy remote.” The BitGo representative 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.”
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 1 BTC.”
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.
