Industry experts and Coinbase CEO, Brian Armstrong, were quick to dismiss speculations that Coinbase had issued Bitcoin IOUs. Crypto analyst Tyler Durden raised concerns over the weekend, accusing Coinbase of allowing BlackRock, the largest spot bitcoin ETF manager, to borrow cryptocurrency without providing collateral. Durden suggested that such actions could potentially manipulate the market and result in profits from price fluctuations. The accusations emerged following criticism from Tron founder Justin Sun regarding Coinbase’s cbBTC product, stating it lacked transparency and could freeze balances at any time.
In response to these allegations, Armstrong clarified that ETFs were managed and settled on-chain within one business day, with institutional clients having trade financing options. This explanation prompted Tyler Durden to retract his initial tweet. The concept of IOU crypto tokens was likened to tracking indebtedness between parties, similar to issuing an IOU notice in a transaction.
Bloomberg ETF analyst James Seyffart dismissed the rumors and conspiracy theories as baseless, emphasizing the transparency of issuers like BlackRock, who publish digital wallet addresses. Bitwise, a crypto spot bitcoin ETF issuer, also provides transparency by sharing wallet addresses for Bitcoin and spot Ethereum funds. Bloomberg’s senior ETF analyst Eric Balchunas expressed frustration with the Bitcoin community for attributing recent market pressure to ETFs rather than examining internal factors.
Balchunas highlighted the skepticism of Bitcoin investors towards government and institutions, noting that BlackRock takes potential misconduct by Coinbase and Armstrong seriously. He emphasized that BlackRock would not overlook any wrongdoing involving their Bitcoin holdings.