On August 9, BitGo announced its intention to transfer the custody of Wrapped Bitcoin (WBTC) to a joint venture with Bit Global, a transition expected to occur within the next 60 days. Notably, Justin Sun and the Tron ecosystem are involved in this shift. This development has sparked significant concern, particularly within MakerDAO, due to Sun’s involvement and potential repercussions on WBTC.

MakerDAO has expressed strong reservations about Sun’s participation, drawing parallels to previous issues under his management, specifically with the TUSD stablecoin. The DAO criticized Sun’s handling of TUSD, citing market disruptions, a lack of transparency, and operational challenges, including the resignation of key personnel and interruptions in redemption services.

Further allegations indicate Sun’s influence over other projects, such as the recent substitution of Huobi’s USDT reserves with stUSDT. MakerDAO has labeled stUSDT as a Sun-controlled project, which purports to hold U.S. treasury bills but lacks transparent audits or substantial evidence to back these claims. Consequently, MakerDAO has argued that Sun’s involvement in the new WBTC venture introduces an “unacceptable level of risk.”

MakerDAO’s Proposed Risk Mitigation Strategies

In light of these concerns, MakerDAO has proposed several risk mitigation strategies. The DAO proposes disabling WBTC borrowing on SparkLend and reducing the loan-to-value (LTV) ratio for WBTC from 74% to 0%. Additionally, it recommends resetting the debt ceiling for WBTC collateral integrations to zero. These proposals will be voted on during MakerDAO’s executive session on August 12.

Justin Sun quickly responded to these concerns, emphasizing to X that his role in WBTC is “entirely strategic.” He clarified that his involvement varies across different projects, all to promote decentralization, security, and safety. Sun also stressed that he does not control the private keys to WBTC reserves, managed through BitGo’s cold wallet technology and offline key protection.

Sun sought to reassure the community regarding WBTC’s security and management, noting that BitGo and BitGlobal continue to oversee WBTC’s minting and auditing processes as before. According to Sun, there have been no changes in the security protocols or operations related to WBTC. He highlighted that BitGo’s cold wallet technology ensures secure offline storage for private keys, with backups in multiple locations.

The ongoing debate between MakerDAO and Sun underscores the heightened scrutiny surrounding WBTC’s custody and management. The implications of these changes for the decentralized finance ecosystem remain a topic of active discussion.

Also read: Anubis Hacker Behind $60 Million Theft Reveals New Altcoin Project