Over the weekend, some accounts on X have gone out on a limb to accuse Coinbase of collaborating with BlackRock by providing Bitcoin IOUs. The hypothesis is that the two want to manipulate the price of BTC. The CEO of Coinbase, Brian Armstrong, responded immediately, trying to disprove the existence of this sort of conspiracy.
Coinbase and the accusations of writing Bitcoin IOUs for BlackRock: the CEO denies the existence of a conspiracy
During the weekend, the user TylerDurden on X, started circulating rumors accusing Coinbase of writing Bitcoin IOUs for BlackRock, in a form of market manipulation.
This “conspiracy” was quickly refuted by Brian Armstrong, CEO of Coinbase, and by other high-profile members of the crypto community.
(During the drafting of the article, Tyler Durden’s tweet was removed from social media, but we can show the screenshot)
TylerDurden said:
“I told everyone who went through the chain – I mean it’s a public ledger, literally anyone can do it – that Coinbase is writing IOUs for Blackrock. Now everyone is waking up and hopefully Coinbase will have a run on the banks. Baldilocks is against bitcoin.”
While Armstrong responded:
“This is Baldilocks. I’m not sure what this is about. All the mint and burn of ETFs we handle are ultimately settled onchain. Institutional clients have exchange funding and OTC options before exchanges are settled onchain. This is the norm for all our institutional clients. All funds are settled in our Prime vaults (onchain) within about one business day. If you want an audit, Deloitte audits us annually, we are a public company. I doubt our institutional clients want people dusting all their addresses, and it’s not up to us to share them for them. This is what it looks like if you want a bunch of institutional money flowing into Bitcoin. As for cbBTC, it’s true that you are relying on a centralized custodian to hold the underlying BTC – we have never claimed otherwise.”
Is Coinbase selling Bitcoin IOU to BlackRock?
In practice, i rumors believe that, since Coinbase is the largest buyer of Bitcoin (BTC), both during its price lows and highs, it may issue “IOUs” to BlackRock.
This would mean that Coinbase would be allowing BlackRock to borrow Bitcoin without providing collateral, according to the accusations.
At the moment, BlackRock owns over 375,000 BTC and with this hypothesis, it would be able to manipulate the price of BTC upwards or downwards, at its pleasure.
In simple terms, the conspiracy suggests that BlackRock and Coinbase are profiting from the Bitcoin market, habitually controlling the bull and bear movements of the currency within the price range of 55-70k US dollars.
Armstrong, however, emphasized that all of Tyler Durden’s findings are normal, describing the procedure and debunking the conspiracy theory.
Not only that, but Bloomberg analyst and ETF expert, Eric Balchunas, also commented on the rumors, however supporting Armstrong.
“I understand the reason why these theories exist and people want to mimic the ETFs. Because it is too unthinkable that the native HODLers could be the sellers. But it is so. The call is coming from inside the house. All that the ETFs and BlackRock have done is save the price of btc from the abyss repeatedly.”
The launch of Wrapped Bitcoin cbBTC
A few days ago, Coinbase launched its version of Wrapped Bitcoin, the cbBTC.
This is a tool developed to bring the potential of Bitcoin into the growing DeFi ecosystem on Ethereum and Base, the layer 2 blockchain developed by Coinbase.
With cbBTC, Coinbase enters the Wrapped Bitcoin market, and launches a direct challenge to WBTC, the industry leader, issued by BitGO.
Source: https://en.cryptonomist.ch/2024/09/16/coinbase-accused-of-writing-bitcoin-ious-for-blackrock-the-response-from-the-ceo/