Journalist
Posted:
- Coinbase defended its ETF holdings and new cbBTC offering.
- However, the community sought clarity on its cbBTC BTC support.
Coinbase made headlines on September 15 amid intense scrutiny and accusations of a lack of transparency in its Bitcoin [BTC] reserves.
The community’s claims increased after the world’s largest crypto custody company launched its wrapped BTC, cbBTC. This BTC derivative is useful as collateral in the DeFi space.
However, that’s not all. Some community members claimed that Coinbase ‘sold paper BTC‘ to BlackRock without proper 1:1 support.
Basically, members tried to know Coinbase’s BTC reserves for its cbBTC and BlackRock ETF.
Coinbase defends itself
In a rejoinder, Coinbase founder Brian Armstrong defended the company on the two claims. As for BlackRock’s allegations, he said declared that Deloitte audits the company annually and cannot share clients’ wallet addresses.
“If you want audits, Deloitte audits us annually; we are a listed company. I doubt our institutional clients want people dusting off all their addresses, and it’s not our place to share this with them.”
It is not the first time this accusation has been made. Same in May claim was made against Coinbase and BlackRock.
However, ETF experts like Bloomberg’s ETF analyst Eric Balchunas discredited May’s accusations. They noted that the lack of transparency was due to a lack of in-kind redemptions in the ETF design.
Balchunas too hit the latest accusations. It is worth noting that Arkham traces most ETF issuers and their holdings, which can be verified.
CbBTC’s reserve questions remain
That said, Armstrong’s statement on cbBTC left more questions than answers. He said:
“As for cbBTC, yes, you rely on a centralized custodian to store the underlying BTC – we have never stated otherwise.”
Some community members felt that even if the company is a centralized custodian, it should allow people to verify their BTC backing for cbBTC.
Transparency is part of the blockchain ethos. However, Armstrong’s statement on cbBTC was considered less satisfactory. One of the market watchers declared,
“They will not provide any evidence of reserves for the BTC they *claim* they have, nor any evidence of support for their new paper BTC called cbBTC. If they print too much paper BTC, they will go the FTX route.”
Coinbase’s cbBTC will compete with BitGo’s WBTCwho will transfer custody activities to Justin Sun’s firm. Some accusations could be interpreted as a battle for market share.
However, it remains to be seen whether Coinbase will announce the support of its cbBTC.