Industry insiders and Coinbase CEO Brian Armstrong acted swiftly to dismiss speculations claiming that Coinbase had issued Bitcoin IOUs. Crypto analyst Tyler Durden, a prominent critic, had alleged over the weekend that Coinbase allowed BlackRock, the company overseeing the largest spot bitcoin ETF, to borrow cryptocurrency without providing collateral. Durden suggested that such actions could lead to market manipulation and profit from price fluctuations. These accusations were prompted by a critique from Tron founder Justin Sun regarding Coinbase’s cbBTC product lacking Proof of Reserves and audits, indicating a potential for freezing balances arbitrarily.
In response, Coinbase CEO Brian Armstrong clarified that ETFs are minted, burned, and settled on-chain within one business day. He explained that institutional clients have the option to utilize trade financing and over-the-counter services prior to trades being fully settled. Following Armstrong’s explanation, Tyler Durden retracted his statement. The concept of an IOU crypto token was likened to a notice of indebtedness between parties to track transactions.
Bloomberg ETF analyst James Seyffart denounced the rumors as baseless and mere conspiracy theories. Concerns about transparency were raised, with Seyffart mentioning that issuers like BlackRock provide digital wallet addresses to the public for added transparency. Eric Balchunas, a senior ETF analyst at Bloomberg, expressed frustration over the Bitcoin community attributing recent market pressure to ETFs instead of examining internal factors. Balchunas highlighted that most Bitcoin investors are wary of governmental and institutional involvement, but BlackRock maintains a serious approach to cryptocurrency. In the event of any misconduct by Coinbase or CEO Armstrong concerning Bitcoin, BlackRock would likely respond strongly.
The article titled “Coinbase Refutes BlackRock IOU Rumors, Experts & CEO Armstrong Weigh In” was originally published on CoinGape.