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It is rumored that WETH is insolvent, Sun Yuchen and Vitalik Buterin’s $2 billion rescue is a joke

November 28, 2022
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The recent WBTC/BTC de-anchoring caused doubts among members of the encryption community. The community took the opportunity to publish a spoof article mocking WBTC, “WETH has de-anchored from ETH, and poorart.weth announced that it has filled its $2 billion shortfall by raising funds.” The contract directly encapsulates the token of ETH, and the contract level can realize 1:1 exchange.

Poordart.weth, co-founder of the Wrapped Ethereum (WETH) Foundation, also joked, “Unfortunately, the rumors are true. The entire project will be returned to the community (except the treasury), and I will go to a non-extradition country to recuperate my spirit.” Justin Sun also joined in, stating that “As a member of the cryptocurrency industry, I have personally discussed with Vitalik Buterin that together we will invest $2 billion in the WETH Foundation to restore all funds.”

Dune data shows that Alameda Research, which has filed for bankruptcy, is the largest minter of WBTC. Twitter user Castaneda stated that Alameda has acted as a merchant at Wayback Machine Checkpoint since at least September 28, 2020, but Alameda can only mint WBTC, not custody BTC. Now Alameda is no longer listed as a merchant, and the Alameda custodian wallet cannot be found on the audit page.

By checking the wallet of its previous custodian, it was found that the wallet was emptied, and the last 5,000 BTC were withdrawn on November 11, shortly after the FTX crash. Castaneda emphasized that it does not believe this poses any systemic risk, as custodians still maintain the necessary reserves to ensure a 1:1 ratio between WBTC/BTC. WBTC still looks solid, with price swings that appear to be driven more by market panic than insolvency.

Previous ArticleData: BTC worth more than $2.8 billion has flowed out of exchanges in the past month
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