BitGo recently announced shifting its Wrapped Bitcoin (WBTC) product to a multi-jurisdictional joint venture with Hong Kong-based BiT Global, forming a strategic partnership between BitGo, Justin Sun, and the Tron ecosystem.
On August 9, BitGo revealed that it would expand its custodial jurisdictions for the underlying Bitcoin, which was previously held exclusively in the United States. Some of the locations include Singapore and Hong Kong. They are facilitated through a joint venture with Hong Kong-based BiT Global and a strategic partnership involving Sun and his Tron ecosystem.
Justin Sun’s involvement raises concerns among the crypto community
The partnership between BitGo and Tron CEO Justin Sun has not been received kindly by the community. Sun’s links in the joint venture have a 60-day transition period. This development has led MakerDAO’s risk management team, Block Analitica Labs, to post on its forum. Ba Labs proposed preventing new borrowing against WBTC collateral on Maker’s governance forum.
“On the whole, we find that Sun’s involvement as a controlling interest in the new WBTC joint venture presents an unacceptable level of risk,” pseudonymous BA Labs co-founder Monetsupply wrote.
BitGo CEO defends the security protocols of Wrapped Bitcoin
BitGo CEO Mike Belshe described the situation as “nothing to be concerned about”. In the MakerDAO forum, where the BA Lab’s proposed changes were published, Belshe said the underlying WBTC security protocols are not in danger and will remain the “same as what you have today.”
Mike Belshe reassured stakeholders about Wrapped Bitcoin’s (WBTC) security despite the recent expansion. He emphasizes that BitGo will not sign a transaction without the corresponding mint BTC deposit or burn token ownership.
He noted that Merchants are still part of the process, which leaves the remaining risk of the underlying treasury itself, with keys now being separated across parties in a way they never were before.
On August 11, Sun also addressed the controversy in a post on social media platform X:
Recently, I've heard that the community has some concerns about my involvement in various projects, including WBTC. I would like to clarify the following points:
— H.E. Justin Sun 孙宇晨 (@justinsuntron) August 10, 2024
There have been no changes to WBTC compared to before. The audits are conducted in real-time and can be accessed via…
He assured the community that there have been “no changes to WBTC,” and his involvement doesn’t include having direct access to funds. Sun stated that the keys are still safeguarded using the same BitGo cold wallet technology and offline keys, with backups in multiple countries and regions.
He added that his link with WBTC is entirely strategic, and he cannot access WBTC’s private keys.
Some crypto community members have touted decentralized alternatives to WBTC, but Belshe cautioned them that such products come with risks. He pointed out that DeFi products are not decentralized and are not worth the risk.
