Cryptocurrency custody platform BitGo recently announced plans to transfer its Wrapped Bitcoin (WBTC) business to a joint venture with Hong Kong-based BiT Global.
The move, intended to enhance security through a multi-jurisdictional and multi-institutional custody structure, has caused backlash due to the involvement of controversial crypto figure Justin Sun.
Backlash Over Justin Sun’s Involvement
In an August 10 post on X, BitGo CEO Mike Belshe confirmed Justin Sun’s involvement in the company’s new partnership. Belshe emphasized that BitGo had disclosed Sun’s role from the beginning to ensure transparency despite him not having the authority to move any funds unilaterally.
Yes, everyone should take a close look at the new setup. It’s why we did a 60 day announcement – to allow sufficient due diligence time.
We recognize the community wants to know about JS involvement in anything, even though he doesn’t have the ability to move funds. That’s…
— Mike Belshe (@mikebelshe) August 10, 2024
However, the announcement has faced considerable criticism from the crypto community, with many raising concerns about the participation of the Tron founder. In a MakerDAO forum, Sun’s involvement was specifically flagged as a significant risk by the firm.
The organization noted past issues with Sun’s ventures, such as the decline in transparency and operations at TUSD under his control. They also mentioned the replacement of Huobi’s USDT reserves with stUSDT, a Sun-controlled project claiming to hold U.S. treasury bills without clear audits or evidence of backing.
MakerDAO expressed serious reservations about the security of the new partnership, stating that it might consider delisting WBTC from its platforms if BitGo fails to provide sufficient assurances.
“We will consider further recommendations for parameter changes to protect the protocol and mitigate counterparty risks, up to and including potential full offboarding of all Maker and Spark WBTC collateral integrations,” the firm stated.
Belshe Responds to Concerns
In response, Belshe dismissed MakerDAO’s concerns as being more about Sun’s reputation than any actual risk. “This seems to be more a reaction to the Justin Sun name than to facts,” he commented, suggesting that the apprehension might be rooted more in perception than reality.
Belshe added that BitGo anticipated such a reaction, which is why they were upfront about Sun’s involvement despite his lack of direct control over the WBTC reserves.
Justin Sun also addressed the controversy, clarifying his role in the WBTC venture in a separate August 10 X post. He stressed that his involvement is purely strategic and that he does not control the private keys to the WBTC reserves, nor can he move any Bitcoin reserves.
Sun reassured the community that the WBTC minting process remains unchanged, with custodians BitGlobal and BitGo continuing to manage it according to the same procedures.
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
“There have been no changes to WBTC compared to before,” Sun noted, emphasizing that all audits are conducted in real-time and accessible via the WBTC network.
He further explained that the keys are safeguarded using BitGo’s cold wallet technology, with backups spread across multiple countries and regions.
