The crypto market has been experiencing turbulent days recently with developments surrounding Wrapped Bitcoin (WBTC). In particular, BitGo’s plans to transfer WBTC custody to a joint venture with BiT Global have raised questions about Justin Sun’s potential influence in the community.
BitGo and Justin Sun partnership raises concerns in the crypto space
BitGo is one of the leading cryptocurrency custody platforms. The company’s decision to move WBTC to a new multi-jurisdictional custody model has raised concerns in the crypto community. One of the main reasons for these concerns is the involvement of Justin Sun, the founder of the TRON blockchain. BitGo announced a 60-day transition period on August 9. The company plans to expand its custody locations to include Hong Kong and Singapore.
In response to this development, leading DeFi platform MakerDAO has begun assessing the potential risks associated with BitGo’s new WBTC custody strategy. The MakerDAO community is evaluating a proposal that aims to reduce all active WBTC debt on the network to zero. The proposal highlights fears that this new move could give Sun significant influence over WBTC. It also cites operational and transparency issues that Sun has had in the past with other crypto projects, such as TUSD and Huobi’s USDT reserves.
Could Sun manipulate the market?
The rest of the crypto community has also voiced these concerns. Some investors are concerned that Sun could use his influence to overprint WBTC or manipulate Proven Reserve data. “BitGo partnering with Justin Sun to audit WBTC is one of the craziest business decisions I’ve ever seen,” Bitcoin Magazine writer Alex Bergeron said.
Sun and BitGo CEO make statements
On the other hand, BitGo CEO Mike Belshe has countered these concerns. Belshe claimed that the platform’s security architecture prevents any kind of manipulation. He also emphasized that BitGo will not allow any printing without a corresponding BTC investment. “We are aware that the community wants to know if JS is involved in anything, even if he can’t move funds. That’s why we made sure to clearly state his name,” Belshe said.
The BitGo CEO called for a thorough review by the community before making any decisions. According to Belshe, Sun is involved in the project but does not have the authority to move funds. He also stated that the WBTC website will continue to operate by providing near-real-time proof of reserves. Sun explained that his role with WBTC is purely strategic. He said that he does not control the private keys of the WBTC reserves and, contrary to rumors, does not have access to the BTC reserves. Sun emphasized that his involvement is aimed at strengthening decentralization, security protocols, and safety, reinforcing the critical role of this digital asset in the DeFi ecosystem.
James Fickel’s closing of one of his crypto positions drew attention
Another turbulent development in WBTC is related to James Fickel. The millionaire founder of the Amaranth Foundation opened a long position against ETH using DeFi strategies. He borrowed wBTC using ETH as collateral to acquire more ETH. Fickel recently closed part of his position, raising questions about his belief in ETH. This may be due to a change in risk management or opinion regarding the latest wBTC news.
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