Industry insiders and Coinbase CEO Brian Armstrong swiftly refuted rumors that Coinbase had issued Bitcoin IOUs.
Crypto analyst Tyler Durden, a well-known critic over the weekend accused Coinbase of allowing the company managing the largest spot bitcoin ETF, BlackRock, to borrow the cryptocurrency without posting any collateral.
Coinbase Armstrong Rejects “BlackRock IOU” Conspiracy Theory
Durden went on to say that would be an easy case of market manipulation and also lead to profits from price fluctuations. The accusations followed a post from Tron founder Justin Sun, in which he criticized Coinbase’s new wrapped bitcoin product, cbBTC, as lacking any Proof of Reserves or audits and being able to freeze balances at any time.
As per Sun:
“Any U.S. government subpoena could seize all your BTC. There’s no better representation of central bank Bitcoin than this. It’s a dark day for BTC.”
Against the accusations now, Coinbase CEO Brian Armstrong explained that the ETFs get minted, burned, and then settled on-chain within one business day. He further said that the institutional clients could use trade financing and over-the-counter options in advance of the trades getting fully settled. Following this explanation, Tyler Durden took down his tweet.
About this, the IOU crypto token is just like an IOU notice in that it signifies some indebtedness between two parties. For instance, if you happened to offer a friend Bitcoin and you want to track the transaction, then the friend issues an IOU token. This token shall remain in your wallet as proof of the debt.
Coinbase Conspiracy Debunked, Balchunas Supports BlackRock
Bloomberg ETF analyst James Seyffart called them baseless rumors and conspiracy theories. “More issuers – BlackRock for one – publish digital wallet addresses with the public at large for added transparency,” Seyffart said. Bitwise, a crypto-native spot bitcoin ETF issuer, has done this for both their Bitcoin and spot Ethereum funds, analysts note.
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