BitGo Plans to Transfer Wrapped Bitcoin Operations to Joint Venture
Cryptocurrency custody platform BitGo has recently revealed its intention to transfer its Wrapped Bitcoin (WBTC) operations to a new joint venture with BiT Global, a Hong Kong-based company. This strategic move aims to bolster security through a structure that encompasses multiple jurisdictions and institutions. However, the announcement has sparked significant backlash due to the involvement of the controversial cryptocurrency figure, Justin Sun.
Community Concerns About Justin Sun’s Involvement
In a post on August 10, BitGo CEO Mike Belshe acknowledged Justin Sun’s role in the partnership, stating that the company had been transparent about Sun’s involvement from the outset. Despite Sun not having unilateral authority to manage funds, Belshe recognized the community’s need for clarity regarding his participation.
“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,” Belshe stated. He highlighted that the community is understandably cautious about Sun’s involvement, although he emphasized that Sun does not have the ability to move funds.
Nevertheless, this announcement has faced substantial criticism from the cryptocurrency community. Many members have voiced concerns regarding the implications of having the Tron founder involved in the joint venture. A notable discussion in a MakerDAO forum flagged Sun’s participation as a considerable risk.
MakerDAO pointed out past issues linked to Sun’s ventures, including a decline in transparency and operational integrity at TUSD while under his leadership. Additionally, they mentioned the substitution of Huobi’s USDT reserves with stUSDT, a project controlled by Sun that claims to back its holdings with U.S. treasury bills, yet lacks clear audits or proof of backing.
The organization expressed serious doubts about the security of the new partnership, warning that it might explore the option of delisting WBTC from its platforms if BitGo does not provide adequate assurances. “We will consider further recommendations for parameter changes to protect the protocol and mitigate counterparty risks, including the potential complete removal of all Maker and Spark WBTC collateral integrations,” the firm stated.
Belshe Addresses the Criticism
In light of these concerns, Belshe responded by downplaying MakerDAO’s worries, suggesting that the apprehension is based more on Justin Sun’s reputation rather than any specific risk. “This seems to be more a reaction to the Justin Sun name than to facts,” he remarked, indicating that the anxieties may be more rooted in perception than reality.
Belshe noted that BitGo was aware of the potential backlash, which is why they were forthright about Sun’s involvement, despite his lack of direct control over the WBTC reserves.
Justin Sun Clarifies His Role
In a separate post on August 10, Justin Sun addressed the controversy surrounding his role in the WBTC venture. He emphasized that his involvement is strictly strategic and that he does not have control over 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 BitGlobal and BitGo continuing to manage it according to the established procedures. “There have been no changes to WBTC compared to before,” Sun stated, aiming to alleviate concerns within the community.
Real-Time Audits and Enhanced Security Measures
All audits are conducted in real-time, ensuring transparency and accessibility through the WBTC network. This approach provides users with the ability to monitor activities as they occur.
Key Protection with Advanced Technology
To enhance security, the keys are protected using BitGo’s cold wallet technology. This method includes backups that are distributed across various countries and regions, adding an extra layer of safety for users’ assets.
