Coinbase, America's largest crypto exchange, and BlackRock, the world's premier asset manager, have found themselves rooted in a new conspiracy theory.
Coinbase, America's largest crypto exchange, and BlackRock, the world's premier asset manager, have found themselves rooted in a new conspiracy theory. Skeptics are spreading unsubstantiated rumors that Coinbase may not actually be buying the real Bitcoin requested by ETF funds but instead issues what they call "paper Bitcoin" or IOUs.
These rumors spread far enough on social media platforms to warrant a response from Coinbase CEO Brian Armstrong. Armstrong waved off the concerns, saying: "All ETF mints and burns we process ultimately settle on-chain."
But conspiracy theorists got new ammo when BlackRock filed an amendment to its ETF registration with the SEC that requires Coinbase to release Bitcoin to the asset manager within 12 hours of notice when customers buy shares of its Bitcoin ETF product.
Other vocal critics online have gone so far as to say that BlackRock can "take as much Bitcoin as they want from Coinbase" through transactions recorded off-chain.
However, Bloomberg ETF analyst Eric Balchunas said those are unfounded conspiracy theories. "This isn't like FTX, where you just throw up an exchange out of nowhere, and some buffoon is running it from a Bahama penthouse," he said. "BlackRock's a serious company that has dozens of lawyers. They're not going to blow their well-earned reputation, let alone get sued by all those investors.
To further debunk these rumors, Balchunas said that, after speaking to BlackRock, he was able to confirm the asset manager operates its own blockchain node and routinely verifies Bitcoin balances from their wallet addresses on Coinbase Prime.
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