Yesterday, BitGo’s official blog showed that BitGo and BiT Global are creating a joint venture to achieve WBTC custody and cold storage diversification across multiple jurisdictions, with BitGo becoming a minority shareholder in the new joint venture. BiT Global is a regulated trust and corporate service provider (TCSP) headquartered in Hong Kong, with a strategic partnership with Justin Sun and the Tron ecosystem.

As soon as the news came out, users speculated that Justin Sun may have significant influence or control over the joint venture managing WBTC. This has a significant impact on the Decentralized Finance market, with concerns that the transfer of control of WBTC to him could bring unforeseen risks.

Jupiter co-founder meow wrote a letter to the new and old custodians of WBTC on social media, stating that the BTC held by WBTC custodians should not be used for other purposes, and hoping that BitGo can clarify community doubts.

The project party that first responded in the Decentralized Finance market is MakerDAO, the largest collateralizer of WBTC. MakerDAO plans to initiate a proposal to reduce the WBTC collateral size in the vote on August 12 to mitigate potential risks of custody rights change.

BA Labs, an encryption risk analysis and assessment agency, stated that due to the imminent change in WBTC custody rights, the WBTC collateral integrated on Maker and SparkLend faces higher potential risks. If Bitgo or other relevant parties cannot convincingly demonstrate the security of maintaining the existing WBTC collateral integration, BA Labs will consider further adjusting parameters to protect the protocol, until completely removing the WBTC collateral on Maker and SparkLend.

In response to the above doubts, Justin Sun said, ‘BTC has not changed compared to before. The audit is done in real-time and can be accessed through 01928374656574839201. The minting process is completely managed by the custodian institutions Bitglobal and Bitgo, following the same procedures as before. In simple terms, Bitglobal and Bitgo do not sign any unaudited transactions. The Secret Key is still protected using the same Bitgo Cold Wallet technology and offline Secret Key, with backups in multiple countries and regions. My personal involvement in WBTC is purely strategic. I do not control the Private Key of the WBTC reserves and cannot move any BTC reserves.’

However, Justin Sun’s statement did not quell market speculation. BitGo CEO Mike Belshe responded on Monday, stating that he would downplay Justin Sun’s involvement in the joint venture and emphasized BitGo’s long-term commitment to security. Belshe said, “BiT Global has a dedicated team managing multiple client accounts, and they are responsible for ensuring the security. They cannot lend funds, or casually transfer funds to Justin Sun, me, or anyone else, otherwise they would violate the law and face the risk of imprisonment.” He also said, “In terms of auditing, we have always had wbtc.network, which will continue to operate.”

So why did BitGo’s collaboration with companies related to Justin Sun trigger such a strong market response? What is the relationship between BitGo and WBTC, and what impact will the collaboration have on the market? BlockBeats has compiled some opinions from industry insiders as follows:

Ai 姨（on-chain data analyst）

There have been many discussions today about the ‘WBTC custody change’ - MakerDAO’s new proposal considers closing the new WBTC lending and dropping the Spark WBTC lending ratio to 0; Sun Ge clarifies the situation, and Jupiter Lianchuang also expresses doubts in a published article.

This tweet will sort out the relevant data of $WBTC, making it easier for everyone to understand this familiar but somewhat unfamiliar asset and how important it is to the current encryption ecosystem.

The Origin of WBTC

WBTC (Wrapped Bitcoin) is an ER20 Token issued on the ETH network, with a value pegged one-to-one with BTC; each WBTC is backed by a corresponding amount of BTC and is managed by a custodian (currently Bitgo), ensuring that WBTC holders can redeem it for BTC at any time.

WBTC was first proposed in 2017 and officially released its White Paper and put into use in 2019. By 2020, the locked BTC scale had exceeded $2.1 billion, making it the well-deserved “bridge between BTC and Ethereum”.

WBTC Data Overview

Currently, WBTC is supported on Ethereum / Base / Kave / Osmosis/ Tron networks, with ETH Mainnet minting accounting for as high as 99.8%. As of today, a total of 154,726 WBTC (valued at 9.45 billion USD) have been minted, accounting for 0.78% of the total BTC Market Cap.

Dune panel “WBTC: Supply Dynamics” data shows that over 41% of WBTC is used in the lending ecosystem, with the largest use case (acceptance merchant) being MakerDAO, and a further 32% used for direct trading.

Data Panel:

WBTC Verification Information

The current impact on the security and practical use of WBTC is unclear. If you want to further understand the specific transactions of WBTC partners/minting and burning, BTC custody Address, etc., you can go to to find relevant information, which has been disclosed very completely by the official.

Overseas encryption KOL

@iamDCinvestor: The dramatic performance of WBTC illustrates well why ETH has such a strong value proposition in the Cryptocurrency and Decentralized Finance fields.

@art_pleb: Without sarcasm, I agree. My point has always been that if BTC has a relatively trust-minimized bridge to connect higher-performance on-chain Decentralized Finance applications, then it will dominate. It could be L2s or ETH / SOL.

If this situation does not occur, ETH, with its native on-chain functionality, has a bright future ahead.

Liu Feng (Founder of BODL Fund)

The launch of WBTC was one of the most significant events during the incubation period before the explosive growth of the Decentralized Finance ecosystem on the Ethereum blockchain. It was during the coldest period of the market in the second half of 2018 when BitGo collaborated with a promising Decentralized Finance protocol to launch WBTC. Through a relatively centralized but reputable approach, BTC assets were introduced into the Ethereum blockchain ecosystem.

The situation has changed dramatically now.

Simply put, BitGo walked into Justin Sun’s house with WBTC: minting WBTC requires locking those precious BTC, and in the future, there is an additional custodian - a company called BiT Global from Hong Kong. The key point is that BiT Global is a joint venture between BitGo and Justin Sun. The question is, is BiT Global reliable? BitGo’s announcement says that BiT Global is a licensed TCSP (Trust or Company Service Provider) company in Hong Kong, which looks impressive… But does the TCSP license have any value? Anyway, the data I see is that this license was introduced in 2018, and as of September 2020, more than 7300 licenses have been issued.

You guys can try it for yourselves.

By the way, the information I saw is that BiT Global was registered on August 9, 2023. There was another important news that month: BitGo, which failed to submit audit reports on time, had its acquisition protocol canceled by Galaxy Digital. After losing the lawsuit, it had to suspend its acquisition of Prime Trust and had to lay off employees, reduce costs, and seek bail-in. Finally, it announced in August 23 that it had raised $100 million.

BitGo announced the financing in August 2023, but blushed and did not disclose who the investors were. Later, there were reports indicating that among the new investors, there were some from Asia. Now it seems quite likely that at that time, Sun had already set his sights on BitGo. This is just speculation. BitGo is a centralized custodian, WBTC is a centralized synthetic asset. I think BitGo has a responsibility to explain these arrangements clearly, otherwise…

Shuidi Capital CEO Dashan also commented in the comment section that ‘if a problem can be solved with technology, do not test human nature.’

Insight Finance

BTC fell, WBTC caused a major shock.

MakerDao releases proposal dumping: The community of the Decentralized Finance project MakerDAO has initiated a proposal to remove WBTC from the Maker collateral vault. The proposal has caused a huge stir in the industry. After all, Maker is the largest collateral lending protocol in the industry, currently managing nearly $5 billion worth of various digital assets on-chain. WBTC is the largest BTC Cross-Chain Interaction asset on the Ethereum network, currently managing over 150,000 BTC with a total value of nearly $10 billion.

WBTC or causing a large number of Defi projects, L2 projects at risk: Currently, many Defi projects choose WBTC to flow from Ethereum, once WBTC is anchored, most projects will be affected. Just like a cluster bomb big pump.