Coinbase CEO Brian Armstrong and industry insiders promptly dismissed speculations alleging that Coinbase had issued Bitcoin IOUs. Critic Tyler Durden made claims over the weekend, accusing Coinbase of enabling BlackRock, the firm managing the largest spot bitcoin ETF, to borrow cryptocurrency without collateral. This could potentially lead to market manipulation and profit from price fluctuations. The accusations surfaced after Tron founder Justin Sun criticized Coinbase’s cbBTC product for lacking Proof of Reserves and auditability, allowing freezing of balances at any time.
In response to these allegations, Armstrong clarified that ETF transactions are minted, burned, and settled on-chain within one business day. Institutional clients have the option to use trade financing and over-the-counter services before trades are fully settled. Subsequently, Durden retracted his statement.
Balchunas, a Bloomberg ETF analyst, discredited the rumors and conspiracy theories, emphasizing that some issuers like BlackRock disclose digital wallet addresses for added transparency. Eric Balchunas, another ETF expert, expressed frustration with the Bitcoin community for blaming recent market pressures on ETFs rather than introspecting.
Moreover, Balchunas highlighted that while many Bitcoin investors harbor skepticism towards governments and large institutions, endeavors involving BlackRock are taken seriously. He emphasized that BlackRock would respond decisively to any misconduct by Coinbase and Armstrong concerning their handling of Bitcoin.