Crypto investors redeem over $30 million WBTC as MakerDAO halts new loans Crypto investors redeem over $30 million WBTC as MakerDAO halts new loans
The crypto community is uneasy with Justin Sun's involvement with the WBTC custody.
2 min read
Updated: Aug. 16, 2024 at 4:11 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
MakerDAO, the decentralized autonomous organization behind the DeFi protocol Maker, has approved a proposal to halt new borrowing against BitGo’s wrapped Bitcoin (WBTC).
On Aug. 15, MakerDAO revealed that it was reducing the debt ceiling for all WBTC vaults to zero. This move effectively prevents any new borrowing from these vaults and lowers WBTC’s loan-to-value (LTV) ratio on SparkLend to 0%.
The protocol outlined the changes, stating:
“WBTC-A, WBTC-B, and WBTC-C have been removed from the Debt Ceiling Instant Access Module (DC-IAM). The debt ceilings for WBTC-A, WBTC-B, and WBTC-C are now set to 0 DAI.”
MakerDAO clarified that these changes will not affect existing borrowing positions within the Maker Protocol’s core WBTC vaults and SparkLend.
Etherscan data shows that two Maker’s smart contracts are among the top ten largest holders of WBTC, with more than 6,600 WBTC tokens valued at nearly $380 million.
Why MakerDAO removed WBTC
MakerDAO’s decision to remove WBTC is linked to recent community concerns over Tron founder Justin Sun’s involvement with the digital asset.
Last week, BitGo, the developer and custodian of WBTC, announced a partnership involving Sun and BiT Global to manage WBTC custody. This arrangement shifted custody from the United States to multiple jurisdictions, including Hong Kong and Singapore.
Following the news, several crypto stakeholders, including MakerDAO contributors, expressed concerns about the security of the tokens and Sun’s involvement with the project.
However, BitGo CEO Mike Belshe emphasized that Sun has no influence over the tokens and assured that the crypto entrepreneur had no access to the crypto custodian’s asset keys.
Over $30 million WBTC burned
Nevertheless, these assurances appear to have had no impact on crypto investors’ confidence.
On-chain data shows that crypto investors were reducing their exposure to WBTC by burning and redeeming their assets. According to its dashboard, approximately 575 WBTC, worth over $30 million, have been burned during the last seven days, with crypto exchange Crypto.com and Galaxy Digital leading the charge.
Meanwhile, WBTC’s rivals, like tBTC, have seen a growth in their numbers. According to the Dune Analytics dashboard, tBTC holders surpassed 1,000 during the past week, while its total supply stood at 3,107.36 tBTC as of press time, equivalent to more than $180 million.
Additionally, Coinbase has hinted at launching its own wrapped Bitcoin product soon.
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Author 
Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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In this article
Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Ethereum
$3,474.10
Ethereum is a decentralized, open-source blockchain platform that enables the creation of smart contracts and decentralized applications (DApps).
Wrapped Bitcoin
$66,036.62
Wrapped Bitcoin delivers the power of Bitcoin with the flexibility of an ERC20 token.
Maker
$1,695.99
Maker is a decentralized autonomous organization on the Ethereum blockchain seeking to minimize the price volatility of its own stable token — the Dai — against the IMF’s international currency basket SDR.
Dai
$1.00008
Dai (DAI) is a cryptocurrency token and operates on the Ethereum platform.
BitGo
BitGo is a market leader in institutional-grade cryptocurrency investment services, providing institutional investors with security, compliance, and custodial solutions for blockchain-based currencies.
Coinbase
Coinbase is a digital currency exchange and wallet service that allows individuals to buy, sell, and store digital currencies, such as Bitcoin, Ethereum, and Litecoin.
Maker is a Decentralized Autonomous Organization that creates and insures the dai stablecoin on the Ethereum blockchain.
Justin Sun has carved a name for himself as a leading figure in the blockchain sector.
Mike Belshe is a co-founder and CEO at BıtGo, an institutional-grade digital asset financial services company, headquartered in Palo Alto, California that was founded in 2013.
