Threshold community proposes merging tBTC with WBTC. The proposal is driven by concerns over WBTC’s stability due to Justin Sun’s involvement. According to the proposal, BitGo will receive T tokens, becoming a major stakeholder in Threshold Network.

In a strategic move to protect the future of Wrapped Bitcoin (WBTC), a proposal dubbed “#saveWBTC – a merger with Threshold’s tBTC” has been put forward to merge the decentralized tBTC token of Threshold with BitGo’s WBTC. The proposal, currently under discussion on Threshold’s forum page, comes in response to rising concerns within the crypto community regarding WBTC’s stability following BitGo’s partnership with Hong Kong-based BiT Global, a company partly owned by Justin Sun, founder of the Tron ecosystem. Unease with Justin Sun’s involvement with WBTC The partnership has raised alarms due to Sun’s controversial track record, with past incidents of misappropriating collateral. This unease has already led major DeFi protocols like MakerDAO to limit their exposure to WBTC, halt its use as collateral, and consider fully offboarding the asset. Aave, another significant player in the DeFi space, is also closely monitoring the situation. The Threshold, WBTC merger proposal The merger proposal seeks to replace WBTC’s centralized custody and merchant-based mint and burn model with its decentralized and permissionless mint/redeem mechanism. This transition aims to ensure the safety and stability of the underlying collateral, reassuring users and protocols reliant on WBTC. The plan involves granting Threshold’s DAO merchant privileges for WBTC while disabling tBTC minting, allowing existing tBTC holders to redeem WBTC at a 1:1 ratio. As part of the proposal, BitGo would receive a grant of T tokens, making it the largest stakeholder in the Threshold Network. The merger would be implemented in stages to ensure a seamless transition, with a fallback plan to offboard WBTC safely if the proposal is declined. By combining WBTC’s established user base and liquidity with tBTC’s decentralized technology, Threshold aims to preserve WBTC’s role in the DeFi ecosystem, ensuring that the concerns over BiT Global’s involvement do not destabilize the broader market.

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The SEC has charged investment adviser Galois Capital with crypto custody violations, including holding of investor assets on FTX. Galois Capital has settled with the regulator and will pay $225,000 in civil penalty.

The US Securities and Exchange Commission has charged Florida-based investment adviser Galois Capital Management LLC over the company’s failure to properly custody client assets. In an announcement on September 3, the SEC said the Galois Capital had failed to comply with crypto custody requirements and had violated the Advisers Act, including holding cryptocurrencies with the collapsed crypto exchange FTX. As a result, nearly half of the assets under management of a hedge fund Galois advised were lost when FTX imploded. Galois Capital also misled investors The SEC also notes that the firm misled its investors on redemption practices – particularly on “the notice period required for redemptions.” “By failing to comply with Custody Rule provisions, Galois Capital exposed investors to risks that fund assets, including crypto assets, could be lost, misused, or misappropriated,” Corey Schuster, co-chief of the SEC Enforcement Division’s Asset Management Unit, said. According to the SEC, Galois agreed to a settlement with the regulator and will pay $225,000 in civil penalties. The fine will be distributed to investors harmed during the collapse. “Without admitting or denying the SEC’s findings, Galois Capital consented to the entry of an order requiring it to cease and desist from further violations of the Advisers Act, censuring it, and imposing the civil penalty,” the SEC wrote. The SEC has in recent weeks charged Abra with offering unregistered securities and two brothers in relation to a $60 million Ponzi scheme. NFT marketplace OpenSea also received a Wells Notice from the regulator.

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