The recent announcement of the custody change of WBTC, a wrapped version of bitcoin, has prompted a negative reaction in decentralized finance ( defi) protocols that reject Justin Sun’s disclosed relation with the project. Bitgo is moving WBTC custody to a joint venture with Bit Global, another custodian, to diversify custody locations and decentralize private keys between Singapore and Hong Kong.
WBTC Custody Changes Prompts Defi Moves, Bitgo CEO Disregard Concerns
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Bitgo to Execute Changes in WBTC Custody Structure, Defi Community Worried on Justin Sun’s Involvement
Bitgo, issuer and custody provider of wrapped bitcoin (WBTC), a token that serves as bitcoin proxy for many decentralized finance ( defi) applications, recently announced changes in the custody structure of its business. The company announced that it would move its WBTC business to the “world’s first multi-jurisdictional and multi-institutional custody” as part of a joint venture with Bit Global, Tron founder Justin Sun, and the Tron ecosystem.
While Bitgo stressed that WBTC would be using the same custody solution, but with the ability to distribute its keys around the world, the inclusion of Justin Sun in the venture raised concerns in the decentralized finance community.
Makerdao’s risk management team, Block Analitica, proposed to limit the growth of WBTC exposure, given the elevated level of risk associated with its collateral integrations. Mike Belshe, Bitgo CEO, explained that this reaction seemed justified only due to the mention of Justin Sun’s name and not to technical facts.
While Sun’s participation in the joint venture was not clarified, Belshe stressed he was not part of the management team of Bit Global and didn’t have key material access, but that he was “materially involved.”
Sun also answered these concerns, clarifying that this new joint venture would not sign any unaudited transactions, maintaining the same audit system with the same procedures followed now. He stated:
My personal involvement in WBTC is entirely strategic. I do not control the private keys to the WBTC reserves and cannot move any BTC reserves.
What do you think about WBTC’s custody changes and their backlash across the defi ecosystem? Tell us in the comments section below.
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