Wrapped Bitcoin Completes Corporate Restructuring

Wrapped Bitcoin has finally completed its highly-scrutinized corporate restructure.

On Oct. 9, Wrapped Bitcoin, the issuer of the largest BTC-backed ERC-20 token, WBTC, announced the completion of its controversial organizational overhaul.

BitGo, the U.S.-based company that created Wrapped Bitcoin, transferred control over the protocol to a joint venture with BiT Global, with Justin Sun, the founder of Tron, also involved in the deal.

“This move… introduces a global network of custody locations in the U.S., Hong Kong, and Singapore, created through a partnership between BitGo and BiT Global,” Wrapped Bitcoin said. “As part of the decentralized custody system, wallet keys are distributed across multiple geographic regions to mitigate risks associated with single-point-of-failure scenarios.”

BiT Global emphasized that the overhaul ushered in a “multi-jurisdictional and multi-institutional” custody solution underpinning Wrapped Bitcoin’s reserves.

The announcement came on the same day that Wrapped Bitcoin moved the Bitcoin collateral backing WBTC on-chain, suggesting the finalization of the project’s restructuring was likely imminent.

Controversy and backlash

Wrapped Bitcoin first announced its corporate overhaul in early August, eliciting mixed reactions from the crypto community.

Many onlookers expressed concerns regarding Sun’s involvement with the project, with Sun’s association with Huobi and Truecoin precipitating HUSD and HBTC failing and TUSD suffering multiple depegs. Last month, TrueCoin also settled charges from the U.S. Securities and Exchange Commission alleging that TUSD hasn’t been collateralized by U.S. dollars since 2022.

BA Labs, a risk adviser to Sky (formerly MakerDAO), recommended that the protocol fully offboard WBTC ahead of the Wrapped Bitcoin’s restructuring, alleging that Sun likely controls BiT Global through opaque shell companies, nominee directors, and affiliates. However, the proposed measures were put on hold after BA Labs received assurances that BiT Global could not make changes to the Wrapped Bitcoin protocol or transfer WBTC’s collateral without authorization from BitGo.

Bitcoin tokens boom

Issuers of rival Bitcoin-backed tokens have capitalized on the drama surrounding Wrapped Bitcoin’s restructuring with market share gains.

The capitalization of Coinbase’s cbBTC has surged to a $367 million market cap since launching four weeks ago, while the market cap of Thesis’ tBTC is up 36.5% since Wrapped Bitcoin’s overhaul was announced, according to CoinGecko.

Solv’s Bitcoin liquid staking token has also emerged as a player amid the rise of the Babylon Bitcoin staking protocol, with solvBTC currently boasting a total value locked of $474.5 million, according to DeFi Llama.