TL;DR
- Coinbase was accused of collaborating with BlackRock in issuing Bitcoin “IOUs” to manipulate its price.
- Brian Armstrong, CEO of Coinbase, denied the accusations and assured that all institutional transactions are settled on the blockchain.
- Coinbase launched cbBTC, its own version of Wrapped Bitcoin, to expand BTC’s use in DeFi.
During the weekend, rumors emerged accusing Coinbase of collaborating with BlackRock in issuing Bitcoin “IOUs,” which would supposedly allow both entities to manipulate the price of the cryptocurrency.
The accusations, driven by the user TylerDurden, suggest that Coinbase might be allowing BlackRock to operate with large amounts of Bitcoin without offering collateral, with the intention of influencing BTC market fluctuations.
According to this theory, both companies would have managed to control the movements of the cryptocurrency, keeping its value within a specific range to benefit from bullish and bearish operations.
Baldilocks here.
Not sure what this is all about TBH. All ETF mints and burns we process are ultimately settled onchain. Institutional clients have trade financing and OTC options before trades are settled onchain. This is the norm for all our institutional clients. All funds…
— Brian Armstrong (@brian_armstrong) September 14, 2024
Coinbase CEO Responds
Brian Armstrong, CEO of Coinbase, quickly responded to these speculations, categorically denying the existence of any conspiracy between his company and BlackRock. Armstrong explained that all transactions involving the creation and settlement of institutional funds are processed on the blockchain and that the exchange undergoes annual audits by Deloitte, a renowned auditing firm. He also stated that Coinbase’s current procedures for institutional clients, such as BlackRock, are entirely transparent and comply with standard market practices.
In addition to Armstrong’s response, Bloomberg analyst Eric Balchunas also weighed in on the discussion, rejecting the manipulation theories and asserting that Bitcoin market fluctuations are more due to the actions of long-term investors rather than any direct intervention from companies. According to Balchunas, ETFs and players like BlackRock have helped stabilize Bitcoin’s price during critical moments, preventing it from falling during periods of high volatility.
Alongside these accusations, Coinbase launched a new tool called cbBTC, its version of Wrapped Bitcoin. This product aims to allow users to utilize Bitcoin on decentralized platforms within the Ethereum ecosystem and Base, Coinbase’s layer-2 solution.
