MakerDAO Flags Risks From Justin Sun's Role in Wrapped Bitcoin Custody Shifts

MakerDAO, a prominent player in the decentralized finance (DeFi) sector, is assessing the impact of the upcoming Wrapped Bitcoin (WBTC) custody shifts on its risk management framework.

MakerDAO, a key participant in the decentralized finance (DeFi) space, is evaluating the implications of upcoming custody shifts for Wrapped Bitcoin (WBTC) on its risk management framework.

Following an announcement by BitGo, a major custodian for WBTC, that it will be transferring control of the product to a new joint venture with BiT Global, the governance-heavy DAO has adopted a rather cautious approach.

MakerDAO Highlights Justin Sun’s Role

MakerDAO is exploring several options to minimize risks associated with the changes in custody for WBTC. This review comes after an update from BitGo, the current custodian of the product, on the transfer of control and operational jurisdictions.

This change involves collaboration with Justin Sun and the Tron ecosystem, which will now place Sun in a position of influence over the joint venture that will be operating WBTC. Considering Sun’s past involvement with other crypto projects, such as TUSD and Huobi’s USDT reserves, which faced operational and transparency issues, the community has raised concerns.

These developments have prompted the organization to explore potential measures to reduce risk for its platform and its users. The governance activities both on-chain and off-chain indicate a conservative stance on the matter. At the same time, there is a proposal to drastically reduce the portion in the firm’s vaults.

Whoa. @MakerDAO proposal by BA Labs to close all new WBTC debt. Presumably offboarding would follow a few months laterhttps://t.co/jTiEz7C9SY

— PaperImperium (@ImperiumPaper) August 10, 2024

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