TLDR
- BitGo announced changes to its Wrapped Bitcoin (WBTC) business, including diversifying custodial locations to Singapore and Hong Kong.
- The changes involve a joint venture with Hong Kong-based BiT Global and a partnership with Justin Sun and the Tron ecosystem.
- Some concerns have been raised about Justin Sun’s involvement due to past issues with projects he’s been connected to.
- BitGo CEO Mike Belshe argues that WBTC’s security protocols remain unchanged.
- Justin Sun stated his involvement in WBTC is purely strategic and he doesn’t control private keys or reserves.
BitGo, a cryptocurrency custody platform, recently announced significant changes to its Wrapped Bitcoin (WBTC) business.
The company plans to diversify its custodial locations for the underlying Bitcoin, which was previously held solely in the United States. The new locations will include Singapore and Hong Kong.
This move involves a joint venture with Hong Kong-based BiT Global and a strategic partnership between BitGo, the Tron ecosystem, and Tron CEO Justin Sun.
BitGo CEO Mike Belshe stated that there will be a 60-day transition period for the transfer.
WBTC is an ERC-20 token that represents Bitcoin on the Ethereum blockchain. It allows Bitcoin holders to use their BTC within the Ethereum ecosystem, taking advantage of its decentralized applications and smart contracts. Each WBTC is backed 1:1 by actual Bitcoin held in reserve by a network of custodians.
The announcement has sparked debate within the cryptocurrency community, primarily due to Justin Sun’s involvement. Some industry participants have expressed concerns about Sun’s connection to the project, citing past issues with other crypto ventures he has been associated with.
Risk management firm Block Analitica Labs (BA Labs) warned of “elevated levels of risk” and proposed changes to how WBTC is handled within the MakerDAO ecosystem. Their suggestions include closing all new WBTC debts and preventing new borrowing against WBTC collateral in an upcoming executive vote.
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:
There have been no changes to WBTC compared to before. The audits are conducted in real-time and can be accessed via…
— H.E. Justin Sun 孙宇晨 (@justinsuntron) August 10, 2024
In response to these concerns, BitGo CEO Mike Belshe defended the changes. He stated that the underlying WBTC security protocols remain unchanged.
“BitGo is still co-signing all transactions using the same technology it always had,” Belshe explained in a MakerDAO forum post.
He emphasized that BitGo will not sign any transaction that doesn’t have the corresponding mint BTC deposit or burn token ownership.
Justin Sun also addressed the controversy on social media platform X (formerly Twitter). He echoed Belshe’s statement that there have been “no changes to WBTC” and clarified his role in the project.
“My personal involvement in WBTC is entirely strategic,” Sun wrote. “I do not control the private keys to the WBTC reserves and cannot move any BTC reserves.”
Sun further explained that the keys are still safeguarded using the same BitGo cold wallet technology and offline keys, with backups in multiple countries and regions.
Despite these assurances, the debate continues within the cryptocurrency community. The BA Labs team has proposed an executive vote for August 12 to decide if MakerDAO will move forward with changes to its WBTC holdings.
