Justin Sun Sounds Alarm Over Coinbase Wrapped Bitcoin as cbBTC Soars 93%

In just 24 hours since Coinbase unveiled its wrapped Bitcoin, cbBTC, on the Base Network, there’s already a commotion stirring. Tron’s creator, Justin Sun, has expressed a string of apprehensions regarding this new release and has voiced them out publicly. Some of his followers seem to share his concerns about Coinbase’s cbBTC.

One of Justin Sun’s main points of contention revolves around the absence of Proof-of-Reserve (PoR) for the new Coinbase product. Sun points out that cbBTC lacks audits and has the potential to lock up funds without warning, essentially operating on blind trust without any concrete evidence to ensure accountability.

Sun’s worry extends to the susceptibility of having one’s Bitcoin balance seized under a U.S. government subpoena, labeling the cbBTC as a representation of centralized Bitcoin, painting a grim picture for the cryptocurrency. The launch of this product led the price of the unrelated cbBTC token to surge dramatically by over 93% to $0.000153.

Coinbase’s pitch for cbBTC promises more economic freedom for Bitcoin holders by enabling them to use their assets in various ways. The exchange plans to integrate the wrapped Bitcoin into platforms like Compound, Morpho, Moonwell, and Spark. This move aims to bridge Bitcoin with the Layer-2 network and Ethereum, with each cbBTC token being backed 1:1 by the Bitcoin held by Coinbase.

The importance of Proof-of-Reserve (PoR) in the cryptocurrency space has intensified following previous industry breakdowns involving projects like Terra/LUNA and FTX. PoR reports have become vital not only to uphold a protocol’s transparency but also to maintain financial health standards within the ecosystem.

While exchanges like Binance regularly publish PoR reports to assure users of their asset backing, Coinbase’s stance on releasing a PoR for cbBTC following Sun’s concerns remains uncertain. The cryptocurrency community closely watches as these developments unfold, with transparency and accountability at the forefront of industry discussions.

The article, “Justin Sun Raises Major Alert On Coinbase Wrapped Bitcoin As cbBTC Rockets 93%,” was initially featured on CoinGape.