Cryptocurrency custodian BitGo recently announced the tran**er of its Wrapped Bitcoin (WBTC) business to a multi jurisdictional joint venture with Hong Kong based custodian BiT Global, forming a "strategic partnership" between the BitGo and Tron blockchain ecosystems and Tron founder Sun Yuchen. This news has raised concerns among some cryptocurrency market participants, who believe it may pose challenges to the decentralized finance (DeFi) ecosystem.

WBTC is a token issued on the Ethereum blockchain, supported 1:1 by Bitcoin, and used for various DeFi applications. BitGo, the custodian company of WBTC, announced that it will become a minority shareholder in this new joint venture with BiT Global, enabling WBTC to achieve diversified custody operations and cold storage across multiple jurisdictions. According to the announcement, there is a 60 day transition period for this upgrade, and both parties will jointly promote the **ooth process of asset custody and merchant migration.

After the announcement of Sun Yuchen's participation in this joint venture, the risk management team of DeFi lending protocol MakerDAO, Block Analytica Labs, proposed at the governance forum to stop using WBTC as collateral for new lending. Anonymous BA Labs co-founder Monetsupply wrote:

Overall, we found that Sun's involvement as the controlling shareholder of the new WBTC joint venture would bring an unacceptable level of risk

Response from BitGo CEO

BitGo CEO Mike Belshe downplayed Sun Yuchen's involvement in the joint venture during an interview with The Block and emphasized BitGo's long-term commitment to security.

At BiT Global, there is a team that manages multiple client accounts, and they have a responsibility to ensure safe custody. They cannot lend money out or give it to Justin (Sun Yuchen), me, or anyone else at will, otherwise they will violate the law and go to jail, "Belshe said." As proof, we have always had wbtc.network, and this website will continue to operate

Justin Sun stated in a controversial article, "My personal involvement in WBTC is entirely strategic, and I do not control the private keys of WBTC reserves, nor can I move any BTC reserves

Although some members of the crypto community have proposed decentralized alternatives to WBTC, Belshe believes that such products also carry risks. He said, "DeFi products are not so decentralized. Do you know what happens if they decide to start earning profits and taking risks? That's why the structure we created is not legally allowed to do so. That's what makes it unique. That's also why its operating costs are higher

For MakerDAO, Belshe expressed his willingness to assist with due diligence to dispel any doubts. He said:

These people are asking good questions, and they should find ways to conduct due diligence, which will require some innovative and creative methods to find answers... I think in the end, people will realize that it's not a big deal at all