An unidentified wallet address has been rapidly accumulating a substantial amount of Wrapped Bitcoin (WBTC) amidst ongoing controversy over the token’s custody. On August 19, blockchain analytics service Lookonchain reported that this unknown whale address had acquired 347 WBTC, valued at approximately $16 million, within just a few hours.
According to on-chain data, this mysterious wallet has now accumulated a total of 1,953 WBTC from the crypto exchange Binance, with an average purchase price of $58,853.
This aggressive accumulation comes at a time when Justin Sun, the founder of TRON, is embroiled in a controversy regarding his involvement in WBTC custody. Earlier in the month, on August 9, BitGo, the custodian of WBTC, announced plans to transfer control of the token to a new joint venture.
A whale accumulated 347 $WBTC($16M) again 7 hours ago!
Over the past week, this whale has accumulated a total of 1,953 $WBTC($118M) from #Binance at an average price of $58,853.https://t.co/XlRBgyL4Tt pic.twitter.com/g1KRtkK5eY
This venture includes BitGo itself, Sun’s TRON ecosystem, and Hong Kong-based investment manager BiT Global. Sun’s participation in this venture has triggered a wave of concern within the cryptocurrency community, leading to questions about the security and management of WBTC.
Sun is currently facing allegations from Securities and Exchange Commission who accuse him and his companies for offering and selling TRX and BTT as investments through multiple unregistered “bounty programs”. Adding to the intrigue, during this same period, Sun-linked addresses transferred a total of 2,590 Bitcoin (BTC), worth $156.4 million, to Binance.
BitGo’s CEO, Mike Belshe, has attempted to quell fears by downplaying the controversy, suggesting that it is driven more by perception than by actual risk. However, he was unable to provide details about BiT Global’s ultimate beneficial ownership, directors, or officers, which has done little to reassure skeptics. Belshe did acknowledge that if BiT Global were to be compromised, there could be a risk to the treasury.
In response to the growing unease, MakerDAO’s risk unit, BA Labs, proposed offboarding WBTC from its lending platforms, citing the potential risks associated with Sun’s involvement. This proposal was swiftly approved and executed by MakerDAO on August 16, effectively prohibiting the use of WBTC for borrowing on the Sparklend platform.
Lending giant Aave is also considering alternatives to WBTC. The platform is reportedly working on a proposal to introduce Threshold Network’s TBTC as a safer alternative to WBTC in its borrowing and lending operations.
The controversy has led to a broader debate within the crypto community about who should be responsible for the custody of such significant digital assets. Some argue that custody should be managed by traditional financial institutions or established platforms like Coinbase, rather than entities connected to individuals with controversial reputations like Justin Sun.
Amidst all this, there are growing concerns about the stability of WBTC. The fear is that if WBTC’s peg to Bitcoin were to break significantly, it could trigger cascading liquidations, given its widespread use as collateral in the decentralized finance market.
Coinbase has also teased the potential launch of its own wrapped Bitcoin product, tentatively named “cbBTC.” This move, coinciding with rising DeFi activity on Coinbase’s Layer-2 network Base, suggests that competition in the wrapped Bitcoin space may soon intensify.
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