# MakerDAO Halts New WBTC-Backed Loans

*Author: Jack Inabinet*
*Published: Aug 16, 2024*
*Source: https://www.bankless.com/de/makerdao-halts-new-wbtc-backed-loans*

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Crypto’s largest decentralized stablecoin issuer just passed an omnibus governance [proposal](https://vote.makerdao.com/executive/template-executive-vote-wbtc-vault-debt-ceiling-reductions-stability-scope-parameter-changes-bug-bounty-payments-clippermomjob-update-july-2024-aligned-delegate-compensation-6s-capital-stability-fee-increase-monetalis-clydesdale-and-coinbase-custody-dao-resolutions-spark-proxy-spell-august-12-2024) that includes provisions to freeze new borrows against WBTC.

## What’s the Scoop?
- **Custody Calamity: **Last week, longtime WBTC custodian BitGo announced that it would become a minority shareholder in the product under a new joint venture agreement with BiT Global (i.e.; Justin Sun and the Tron Ecosystem), spawning concerns about potential misappropriation resulting from the group’s access.
- **Lending Freeze:** In response to the changes, MakerDAO has approved a proposal to reduce the DAI debt ceiling and loan-to-value ratios for WBTC facilities to zero, effectively halting new borrows against BitGo’s pegged BTC instrument.
- **Collateral Closure:** If the new WBTC venture is unable to convince Maker that its token’s collateral status remains safe, a full off-boarding of all WBTC integrations could commence, forcibly liquidating borrowers who do not close out their positions.

## Bankless Take:
Maker’s decision to preemptively limit WBTC borrows highlights the clear concerns raised by BitGo’s unexpected divestment from the product. The WBTC merger not only grants a new entity with a mixed reputation majority control over the token and its backing, it also indicates financial distress within BitGo that reflects negatively on the counterparty risk of the current custodian.

[Bitcoin Gets Wrapped in Drama on BanklessJustin Sun’s role in a joint venture governing WBTC has Crypto Twitter in a tizzy.![](https://www.bankless.com/assets/img/favicon/apple-touch-icon.png)BanklessJack Inabinet![](https://storage.ghost.io/c/e4/b7/e4b77544-5a37-4f0b-8824-8440aa348476/content/images/2024/08/lu.ma._a_metal_bitcoin_coin_wrapped_in_thick_plastic_wrap_8e2638f7-aeb7-4a27-8a19-89e04f072e50.webp)](https://www.bankless.com/wbtc-gets-wrapped-in-controversy)