- CEO of Coinbase refutes reports that unbacked Bitcoin was sold to BlackRock.
- Armstrong advocates institutional client privacy as well as operational transparency.
Coinbase founder and CEO Brian Armstrong has categorically disputed rumors that the company sold paper Bitcoin to BlackRock without retaining 1:1 reserves. These rumors, which circulated within the cryptocurrency community, sparked worries about Coinbase’s openness in maintaining Bitcoin reserves. Crypto expert Tyler Durden speculated that Coinbase allows BlackRock to borrow Bitcoin without collateral, potentially affecting Bitcoin price movements.
Armstrong addressed the matter on X (previously Twitter), stressing that the minting and burning of Bitcoin for BlackRock’s spot Bitcoin ETF is done publicly and is fully trackable on the blockchain. He further stressed that Deloitte audits Coinbase on an annual basis, with the results available for public inspection.
Clarification to Institutional Clients and Transparency
Durden’s reports were based on data indicating that Coinbase was the most active buyer and seller of Bitcoin during market highs and lows. He suggested that this could indicate price manipulation, with Coinbase potentially benefitting from Bitcoin’s volatility. Armstrong, on the other hand, denied the charges, citing privacy issues as the reason for Coinbase’s inability to share its institutional clients’ wallet addresses.
He went on to say that it’s “the norm” for large clients like BlackRock to manage their Bitcoin using Coinbase’s services, assuring the community that these operations adhere to all privacy and regulatory requirements.
In the same conversation, Armstrong addressed concerns about Coinbase’s wrapped Bitcoin product, cbBTC, stating that it is backed by Coinbase as a centralized custodian. Crypto opponents, including Tron founder Justin Sun, have highlighted concerns over cbBTC’s lack of proof of reserve and audits. Sun warned that the offering might endanger consumers’ assets, escalating the dispute over Coinbase’s openness.
As the competition between Coinbase’s cbBTC and BitGo’s Wrapped Bitcoin (soon to be handled by Sun) heats up, the new accusations could point to a larger market struggle in the Bitcoin derivatives arena. Regardless of the ongoing issue, Armstrong’s promises demonstrate Coinbase’s dedication to regulatory compliance and transparency.
As Bitcoin continues to trade between $58,000 and $59,000, the expected Federal Reserve rate reduction may provide an optimistic outlook for BTC, following prior trends in which macroeconomic developments have positively influenced the cryptocurrency’s value. And at the time of writing, BTC training is $59,379 and down to 1.45%.
(Source:CMC)
