Rumors have been circulating that Coinbase is issuing Bitcoin IOUs (or “paper Bitcoin”) to BlackRock, which ultimately was manipulating the price of crypto lower. Coinbase CEO Brian Armstrong, as well as other industry experts, quickly put the rumors to bed on Monday, after an X user brought the rumors to light over the weekend.
X crypto analyst Tyler Durden accused Coinbase of allowing BlackRock to borrow Bitcoin without providing collateral. This in turn would cause price swings in the asset, allowing BlackRock to manipulate the market and swing prices.
Durden’s allegations came following a post from Tron founder Justin Sun on X. Sun described Coinbase’s new wrapped bitcoin product (cbBTC) as “trust me.” The product lacked Proof of Reserves or audits, technically meaning that the product could freeze balances at any time. “Any U.S. government subpoena could seize all your BTC,” Sun said. “There’s no better representation of central bank Bitcoin than this. It’s a dark day for BTC.”
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Coinbase’s Brian Armstrong Debunks Paper Bitcoin Rumors
Source – Investment Mastery
Brian Armstrong was quick to offer explanations on Monday to debunk the claims by Sun and Durden. Armstrong explained that the ETFs are minted and burned and settled on-chain within one business day. He added that institutional clients have the option to use trade financing and over-the-counter options before the trades are fully settled.
The explanation may or may not have led to Durden deleting his weekend tweet.
ETF experts from Bloomberg: Eric Balchunas and James Seyffart, also came to Armstrong’s defense. They added that Bitcoin’s price recently wasn’t affected by “Paper Bitcoin” from BlackRock and Coinbase. Balchunas criticized the bitcoin community for blaming the ETFs for the recent selling pressure in the market, “instead of looking in the mirror.” “[People] who invest in BTC are generally skeptical of [the government] and institutions (which I get),” Balchunas wrote in a post on X. He would add that BlackRock “isn’t playing around” and that the $9 trillion asset manager would “flip out” if Coinbase was “screwing around with their bitcoin.”
