Coinbase (COIN) swiftly addressed and refuted rumors claiming it had issued Bitcoin IOUs to BlackRock, with both industry experts and Coinbase CEO Brian Armstrong dismissing the allegations.
The rumors, propagated over the weekend by popular X crypto analyst “Tyler Durden,” alleged that Coinbase had permitted BlackRock—issuer of the largest spot Bitcoin exchange-traded fund (ETF)—to borrow Bitcoin without collateral. This, Durden suggested, could lead to market manipulation and exploit price fluctuations for profit.
These claims followed a critical post by Tron founder Justin Sun on X, who questioned the credibility of Coinbase’s new wrapped Bitcoin product (cbBTC). Sun argued that the product lacked Proof of Reserves and audits, raising concerns about potential freezes on balances and the risk of government seizure. “There’s no better representation of central bank Bitcoin than this,” Sun remarked, calling it a “dark day for BTC.”
In response, Coinbase CEO Brian Armstrong clarified that Bitcoin ETFs are minted, burned, and settled on-chain within one business day. He emphasized that institutional clients have access to trade financing and over-the-counter options before trades are fully settled. Following these clarifications, Durden retracted his tweet.
James Seyffart, an ETF analyst at Bloomberg, dismissed the rumors as unfounded and criticized them as another instance of misguided speculation about ETFs. Seyffart underscored the importance of transparency, advocating for more issuers, including BlackRock, to publicly share digital wallet addresses, a practice already adopted by crypto-native spot Bitcoin ETF issuer Bitwise.
Bloomberg senior ETF analyst Eric Balchunas also weighed in, criticizing the Bitcoin community for blaming ETFs for market pressure rather than self-reflection. He defended BlackRock, asserting that the asset manager is serious about its investments and would react strongly if Coinbase were mishandling its Bitcoin.
The controversy highlights ongoing debates and skepticism within the crypto community regarding transparency and institutional involvement in the digital asset space.
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