Sky, formerly known as MakerDAO, is now moving to fully offboard Wrapped Bitcoin amid concerns over the project's pending ownership restructure. On Sept. 12, Monet Supply of the web3 risk and analytics team, BA Labs, published a proposal to Sky’s governance forum calling on the project to fully offboard WBTC — the largest Bitcoin-backed ERC-20 token — after analyzing the joint venture that will soon take control over Wrapped Bitcoin. On Aug. 10, BitGo, the company behind Wrapped Bitcoin, announced it would transfer control over to a joint venture between it and BiTGlobal after 60 days. The venture also plans to partner with Justin Sun, Tron’s controversial founder, and Tron ecosystem. However, the proposal asserts that Sun or affiliates of Sun appear to exert control over BiTGlobal — a fact they say the project has sought to conceal. “We recommend proceeding with an orderly offboarding of all WBTC collateral exposure from the Sky Ecosystem,” Monet Supply said. “Based on available evidence, it is highly likely that Justin Sun or affiliates control BitGlobal, with ownership concealed through shell companies and nominee directors. Justin Sun affiliated stablecoins and custodial products have a significant negative track record and pose elevated counterparty risk.” Sky is a collateralized debt protocol allowing users to mint its DAI stablecoin against collateral assets. WBTC currently collateralizes 127 million DAI and makes up $73 million worth of collateral on Sky’s lending protocol, Spark. DAI is the largest decentralized stablecoin with a $5.12 billion market cap, according to CoinGecko. It also ranks as the third-largest stable token overall behind Tether (USDT) and USD Coin (USDC). The proposal suggests gradually increasing the liquidation threshold for Sky’s WBTC vault and SparkLend’s WBTC pool at a “measured pace” to minimize the impact of offboarding to users, with the process beginning after two weeks. BA Labs recommended that Sky fully offboard Wrapped Bitcoin by Oct. 8, coinciding with the earliest anticipated date for Wrapped Bitcoin’s restructure. The proposal follows Sky preventing new DAI mints or Spark loans collateralized by WBTC on Aug. 15. Alleged concealment The post says that BiTGlobal lists Yiying Jiang among its directors. A recent report from Protos claims Jiang previously served as a director for multiple firms associated with Sun in the past, including entities linked to BitTorrent, Poloniex, Huobi, and TrueUSD. “Based on the preponderance of the evidence, we conclude it is highly likely that Justin Sun has effective control over the BitGlobal entity,” Monet Supply said. “This is notable as while BitGo mentioned Sun’s involvement in their initial disclosure on 9 August, there has been no acknowledgement that Sun owns or controls BitGlobal.” The post also flags significant issues encountered by Sun-linked projects following his involvement, including depegs suffered by TrueUSD, Huobi BTC, HUSD, and USDD. Further, both HUSD and Huobi BTC have since failed, with Huobi BTC trading for $8,904 (84.6% below the price of BTC) and HUSD last changing hands for $0.024 (97.4% below the price of USD). Money Supply also says the projects in question have long sought to conceal their ownership structure and lacked transparency surrounding internal capital flows, posing significant threats to end-users. Replacing WBTC The proposal noted that WBTC collateral accounts for $15 million or 6% of Sky’s annual revenue, advocating for the project to explore onboarding alternative BTC-denominated assets to fill the gap. BA Labs suggested a variety of Bitcoin-backed assets, including Coinbase’s centralized cbBTC token, Threshold’s decentralized tBTC token, and Bitcoin staking tokens powered by Babylon such as Lombard’s LBTC. “Sky and Spark can consider these other products as a way to potentially diversify BTC collateral exposure and serve different user preferences,” the proposal said. The price of Sky’s MKR token is down 0.9% over the past 24 hours, according to The Defiant’s crypto price feeds. The Defiant reached out to Justin Sun for comment but did not receive a response as of publication.