Coinbase CEO Armstrong Responds to Sun’s cbBTC Criticism

Brian Armstrong, the CEO of Coinbase, responded to Tron founder Justin Sun’s comments labeling the introduction of Coinbase’s cbBTC token as a “dark day for Bitcoin.”

Sun expressed his concerns about cbBTC in a Sept. 12 post on X, stating that it didn’t have Proof of Reserves, lacked audits, and posed a risk of freezing user funds. He dismissed it as a “trust me” scheme, cautioning that a US government subpoena could potentially enable authorities to seize the Bitcoin backing it.

“This is the quintessential example of central bank Bitcoin,” he remarked.

In response, Armstrong defended Coinbase’s transparency regarding cbBTC and its centralized characteristics in a Sept. 14 post on X. He emphasized that Coinbase has consistently communicated its role as the custodian of the underlying Bitcoin.

“Not quite sure what the issue is, to be honest,” he stated. “Regarding cbBTC, yes, you are relying on a centralized custodian to manage the underlying BTC – we’ve never claimed otherwise.”

Coinbase Claims cbBTC Will Provide DeFi Access To “Millions Of BTC Holders”

Technically, cbBTC functions as a wrapped version of Bitcoin, set to rival Wrapped Bitcoin (WBTC), which holds a market capitalization exceeding $8.9 billion.

Coinbase announced cbBTC’s rollout on Sept. 12, stating that the token adheres to the ERC-20 format and is fully backed by BTC held by Coinbase on a 1:1 basis.

As per the announcement, this new cryptocurrency will empower “millions of BTC holders” to securely interact with DeFi (decentralized finance) platforms available on the Base layer-2 network.

cbBTC is onchain.

cbBTC is an ERC20 token that is backed 1:1 by Bitcoin (BTC) held by Coinbase.

This means millions of BTC holders can now securely access DeFi apps on @base and Ethereum ecosystems—with more chains coming soon.

Here’s what you need to know ↓ pic.twitter.com/nF8mF3JGms

— Coinbase (@coinbase) September 12, 2024

Armstrong Responds to ETF IOU Speculations

With Sun’s comments regarding cbBTC, there have also been circulating rumors on X that Coinbase is issuing Bitcoin IOUs for BlackRock, potentially manipulating the leading price of the market.

Whatever Coinbase is or isn’t doing, rest assured the ETFs 100% own underlying btc….

It’s real. And it’s spectacular.

That simple. Period. End of story.

Heard same thing back in the day w/ physical gold ETFs.

Anyone perpetuating this stuff doesn’t understand how ETFs work. https://t.co/1msZXUbevn

— Nate Geraci (@NateGeraci) September 14, 2024

Armstrong also addressed these speculations in his response to Sun, explaining that all ETF (exchange-traded fund) mints and burns processed by Coinbase are “ultimately settled onchain.”

However, institutional clients are allowed trade financing and OTC (over-the-counter) options before their trades are finalized on the blockchain within one business day.

Armstrong stated that anyone interested in auditing the exchange’s transactions could refer to the annual audits performed by the well-regarded accounting firm Deloitte.

He added that sharing the addresses of their institutional clients isn’t within Coinbase’s purview, as he believes these clients would prefer to avoid having their addresses “dusting” events.”

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