Bitcoin

cbBTC

BlackRock

<h2 id="key-points">Key Points</h2>
<ul>
 <li>Coinbase is facing scrutiny over its Bitcoin reserves and transparency in its new cbBTC offering.</li>
 <li>Despite allegations, Coinbase founder Brian Armstrong defends the company’s practices and audit processes.</li>
</ul>
<p>Coinbase has found itself in the spotlight on 15th September, facing criticism and allegations of a lack of transparency in its <a href="https://coineagle.com/price/bitcoin/" rel="noopener noreferrer nofollow">Bitcoin (BTC)</a> reserves.</p>
<p>This controversy was sparked by the launch of Coinbase’s wrapped BTC, cbBTC, a BTC derivative that can be used as collateral in the DeFi space.</p>
<h2 id="allegations-of-paper-btc">Allegations of ‘Paper BTC’</h2>
<p>Certain community members have alleged that Coinbase has ‘sold paper BTC’ to BlackRock without a proper 1:1 backing.</p>
<p>These critics are demanding to know the exact amount of Coinbase’s BTC reserves for its cbBTC and BlackRock ETF.</p>
<p>In response to these allegations, Coinbase founder Brian Armstrong defended the company’s practices.</p>
<p>Regarding the BlackRock allegations, Armstrong pointed out that Deloitte conducts annual audits of the company and that it is not Coinbase’s place to share clients’ wallet addresses.</p>
<h2 id="defending-the-company">Defending the Company</h2>
<p>This is not the first time Coinbase has faced these allegations.</p>
<p>In May, similar claims were made against Coinbase and BlackRock, but they were dismissed by ETF experts like Eric Balchunas from Bloomberg.</p>
<p>Balchunas noted that the supposed lack of transparency was due to the absence of ‘in-kind’ redemptions in the ETF design.</p>
<p>However, Armstrong’s statement regarding cbBTC has left some community members unsatisfied.</p>
<p>Despite Coinbase being a centralized custodian, these members believe that the company should allow people to verify their BTC backing for cbBTC.</p>
<h2 id="competing-with-bitgo-s-wbtc">Competing with BitGo’s WBTC</h2>
<p>Coinbase’s cbBTC will be competing with BitGo’s WBTC, which is transferring custody operations to Justin Sun’s firm.</p>
<p>Some of the allegations against Coinbase may be seen as a competitive move for market share.</p>
<p>Yet, it remains uncertain whether Coinbase will disclose its backing for cbBTC in the future.</p>

Coinbase Head Denies Allegations of Peddling ‘Paper Bitcoin’ to BlackRock

Table of Contents

CoinEagle.com

Other articles published on Sep 16, 2024

Polygon Upgrades $MATIC Token to $POL: What It Means for the Network and Holders

Sonic Blockchain Targets $11T Unsecured Lending Market With Credit Scores for Digital Wallets

Tether Faces Transparency Issues with its US Dollar Reserves: Report

MicroStrategy Buys Another $1.11B in Bitcoin, Reaches 244,800 BTC Holdings

Indodax Exchange Loses $20.5M in Suspected Lazarus Group Cyberattack

Binance alerts users to the rising threat of Clipper malware

Join our free newsletter for daily crypto updates!