Sky, formerly MakerDAO, is evaluating the removal of Wrapped Bitcoin from SparkLend over concerns about its ties to Justin Sun.

Sky is considering removing Wrapped Bitcoin (WBTC) as collateral from its decentralized finance platform SparkLend, citing concerns about the token’s affiliations with TRON founder Justin Sun.

On Sept. 12, the team behind Sky announced a proposal to offboard in “several steps with” WBTC-A, WBTC-B, WBTC-C, and WBTC from SparkLend, a decentralized non-custodial liquidity protocol, with the process expected to start on Sept. 26.

The decision comes in response to recent developments involving BitGo and its upcoming partnership with BitGlobal, which is understood see control of WBTC shift to a joint venture linked to Sun.

Sky’s forum post advised users to close their WBTC Legacy Vaults and positions on SparkLend to prevent potential liquidation, citing concerns about increased counterparty risks linked to Sun’s influence, similar to problems seen with other projects associated with him, like the TrueUSD stablecoin.

The controversy surrounding WBTC intensified after a proposal from BA Labs highlighted potential risks associated with Sun’s influence. In a forum post on Aug. 10, BA Labs suggested that recent custody changes and historical issues with Sun-affiliated products warranted caution.

“On the whole, we find that Sun’s involvement as a controlling interest in the new WBTC joint venture presents an unacceptable level of risk.”

BA Labs

BitGo CEO Mike Belshe defended the security protocols in place, pointing out that the proposal to offload WBTC “seems to be more a reaction to the Justin Sun name than to facts.”

Nonetheless, he admitted that the BitGo team was also “concerned that some would react this way to his [Justin Sun’s] name, which is why we made sure to announce his involvement up front, even though he won’t actually have the ability to move any funds arbitrarily.”