Function FBTC

Rejected venues wait the longest for re-review; a rejection has to earn another look before the scheduled date.

REJECTED. FBTC (Function Network’s Bitcoin-backed omnichain asset, unrelated to Fidelity’s spot Bitcoin ETF that trades under the same ticker) follows the same custodial structure as WBTC and BTCB, both already rejected in this registry: BTC held by named custodians, minted 1:1 by KYB-gated Merchants, with retail exit only through secondary markets. A three-member Security Council of Mantle, Antalpha Prime, and Cobo oversees custody through threshold-signature and MPC techniques, which is a more explicit role separation than WBTC discloses, but this review could not confirm the exact approval threshold among the three parties, and no independent, third-party proof-of-reserves attestation was found. Absence of a named scandal does not offset an unconfirmed custody threshold and no independent reserve verification — this is a standing disclosure gap, not a temporary evidence gap.

Kill criteria: the events that revoke this verdict
• An independent, third-party proof-of-reserves attestation for FBTC is published on a recurring basis
• The exact Security Council or TSS approval threshold is publicly confirmed and shown to require genuine multi-party consensus with no single-party override path
• A permissionless or clearly disclosed, non-discriminatory redemption path is demonstrated for non-institutional holders
• Twelve consecutive months with no custody, freeze, or minting-irregularity incident following threshold confirmation

The research file

Mechanism

A user deposits BTC to a Merchant-specific custodial deposit address; the deposit is verified and triggers 1:1 FBTC minting on the destination chain, which includes Ethereum, Mantle, and BNB Chain. Deposit and withdrawal addresses use MPC and multi-signature techniques so no single party holds unilateral custody access. Redemption reverses the flow: FBTC is burned, the burn is verified, and BTC is released from custody.

Control and governance

A three-member Security Council — Mantle, Antalpha Prime, and Cobo — oversees custody via threshold-signature scheme and MPC, audits code, and approves upgrades, with no single member able to act unilaterally per Function’s own documentation. Named contract roles include Custodians (financial institutions holding BTC in MPC addresses), Merchants (KYB-gated parties who mint and burn), a Pauser that can halt contract functions on detected risk, a Safety Committee Member that can execute emergency burns during a crisis, and a Contract Owner that executes upgrades through a Safe multisig gated by Security Council approval. The exact signing threshold for Security Council or TSS approval, for example 2-of-3 versus 3-of-3, was not confirmed in this review, which materially affects how concentrated actual control is despite the disclosed role separation.

Incident record

No depeg, exploit, or custody-failure incident was identified for FBTC through this review’s 2026-08-17 search cutoff. That is a bounded negative finding, not proof of a clean record: public disclosure for FBTC is thinner than for WBTC, and audits from BlockSec, Secure3, and MixBytes are listed without specific dates or scope confirmed in this pass.

Exit

Only KYB-verified qualified users can mint or redeem at par, structurally identical to WBTC’s Merchant-gated model. Retail holders acquire and exit FBTC through secondary-market swaps rather than direct redemption. No independent, third-party proof-of-reserves attestation was found; backing claims rely on the Security Council’s own custody oversight rather than an external verifier.

Comparison

Against WBTC, also rejected in this registry after BiT Global’s 2-of-3 custody-key concentration transition completed: FBTC’s three named institutional custodians carry no comparable controversial-individual red flag, and its role separation is more explicitly documented on paper. But FBTC is newer, has thinner independent reserve verification, and its own approval threshold is unconfirmed — it is not clearly more decentralized than WBTC’s current structure, only differently concentrated in a way this review cannot yet certify.

Sources

The claims above trace to these. Where a number could not be independently verified, the thesis says so.

• FBTC whitepaper v1.1 · primary · accessed 2026-08-17
  Supports: mechanism
• FBTC Docs — roles · primary · accessed 2026-08-17
  Supports: role and authority map
• FBTC Docs — custodial addresses · primary · accessed 2026-08-17
  Supports: custody architecture
• FBTC Docs — pausing · primary · accessed 2026-08-17
  Supports: pause mechanism
• FBTC Docs — audit reports · primary · accessed 2026-08-17
  Supports: BlockSec, Secure3, MixBytes audits listed
• Bitcoin Foundation — what is FBTC crypto, Bitcoin vs Function FBTC · secondary · accessed 2026-08-17
  Supports: disambiguation from Fidelity ETF, Security Council composition

Inherited controls

The verdict above grades the protocol layer. Every position also inherits the asset it holds and the chain it settles on. The least safe layer sets the position’s grade, and the position table names which one that is.