MakerDAO Protests Justin Sun’s Role in WBTC Custody Changes

• MakerDAO has raised concerns about an upcoming WBTC custody shift.
• The change will include Justin Sun and Tron ecosystem as partners.
• MakerDAO claimed this presents an “unacceptable level of risk.”

MakerDAO has expressed grave concern about Justin Sun ’s role in the upcoming Wrapped Bitcoin (WBTC) custody changes.

The development came after BitGo announced on August 9 its plan to transfer control of the WBTC product to a joint venture with BiT Global. Slated to take effect in 60 days, the change in control implements a partnership with Justin Sun and the Tron ecosystem.

Justin Sun Presents an “Unacceptable Level of Risk”

In a statement aired on its public forum, MakerDAO likened the expected WBTC custody shift to a previous concern it raised about Justin Sun’s control of the TUSD stablecoin.

The DAO claimed Sun’s involvement with TUSD led to the stablecoin’s market deterioration in operational processes and transparency, including the resignation of previous senior staff, suspension of real-time proof of reserves, and “several significant depegs” due to interruptions in redemption services.

MakerDAO further claimed to have noticed “worrying signs of possible misappropriation” in other projects linked to Sun, including the recent substitution of Huobi’s USDT reserves with stUSDT.

“stUSDT is a Sun controlled RWA project that purports to hold a reserve of US treasury bills but has not provided clear audits or evidence that the backing exists.” The statement read. “On the whole, we find that Sun’s involvement as a controlling interest in the new WBTC joint venture presents an unacceptable level of risk.”

Following the development, MakerDAO has recommended various measures to mitigate risk for its platform and users. This includes potentially disabling WBTC borrowing on SparkLend and reducing the crypto asset’s loan-to-value (LTV) ratio from 74% to 0%.

The DAO has also recommended resetting the debt ceiling of WBTC-A DC-IAM, WBTC-B DC-IAM, and WBTC-C DC-IAM collateral integrations to zero. The proposals will be included in MakerDAO’s upcoming executive vote on Monday 12 August.

Meanwhile, Justin Sun addressed some of the concerns raised.  

Justin Sun’s Response

In an X post a few hours after MakerDAO released its statement, Justin Sun challenged the concerns, noting that his involvement with WBTC was “entirely strategic.”

“My level of involvement in different projects varies,” Sun wrote. “But my goal with all these relationships is to promote projects dedicated to decentralization, security protocols, and safety. WBTC is a critical part of the defi ecosystem, and I look forward to ensuring it continues to be.”

The Tron founder sought to reassure the crypto community that he did not control the private keys to the WBTC reserves, which he claimed are still safeguarded using the same Bitgo cold wallet technology and offline keys.

Stay updated on Justin Sun’s latest Ethereum acquisition:
Justin Sun Splurges $37 Million on Ethereum Despite Price Plunge: Report

Read how Justin Sun recently denied alleged Bitcoin longing:
Justin Sun Denies Bitcoin Longing at $69K as BTC Price Dives