Industry insiders and Coinbase CEO Brian Armstrong quickly shot down allegations that the company had issued Bitcoin IOUs.
Industry insiders and Coinbase CEO Brian Armstrong quickly dismissed rumors that Coinbase had issued Bitcoin IOUs.
Crypto analyst Tyler Durden, known for his critical stance, accused Coinbase over the weekend of allowing BlackRock, the company managing the largest spot Bitcoin ETF, to borrow Bitcoin without providing any collateral.
Coinbase Armstrong Rejects “BlackRock IOU” Conspiracy Theory
Durden claimed this would amount to market manipulation and lead to profits from price fluctuations.
These accusations followed a post from Tron founder Justin Sun, who criticized Coinbase’s wrapped Bitcoin product, cbBTC, for lacking Proof of Reserves or audits and for having the ability to freeze balances at any time.
Sun stated, “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.”
In response to these claims, Coinbase CEO Brian Armstrong clarified that ETFs are minted, burned, and settled on-chain within one business day.
He added that institutional clients have the option of using trade financing and over-the-counter transactions in advance of the trades being fully settled. Following Armstrong’s explanation, Tyler Durden removed his tweet.
Regarding the IOU crypto token, it functions similarly to an IOU notice, representing a debt between two parties.
For example, if you give Bitcoin to a friend and want to track the transaction, the friend could issue an IOU token, which would remain in your wallet as proof of the debt.
Coinbase Conspiracy Debunked, Balchunas Supports BlackRock
Bloomberg ETF analyst James Seyffart dismissed the rumors as baseless conspiracy theories. Seyffart pointed out, “More issuers – BlackRock for one – publish digital wallet addresses with the public at large for added transparency.”
He noted that Bitwise, a crypto-native spot Bitcoin ETF issuer, has done this for both their Bitcoin and spot Ethereum funds.
Bloomberg’s senior ETF analyst Eric Balchunas expressed frustration with the Bitcoin community for blaming ETFs for recent market selling pressure instead of “looking inward.”
He emphasized that BlackRock is a serious player while many Bitcoin investors are wary of government and large institutions.
According to Balchunas, the asset manager would not tolerate misconduct from Coinbase or its CEO, Armstrong, regarding their Bitcoin dealings.
