Coinbase CEO Brian Armstrong Hits Back at Justin Sun After Tron Founder Calls cbBTC Launch A “Dark Day for Bitcoin”

Updated: 16 September 2024

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Coinbase CEO Brian Armstrong hit back at Tron founder Justin Sun, who called the launch of Coinbase’s new cbBTC token a “dark day for Bitcoin.”

Sun criticized cbBTC in a Sept. 12 post on X for lacking Proof of Reserves, audits, and having the potential to freeze user balances. He derided it as a “trust me” system and warned that a US government subpoena could allow authorities to seize the underlying Bitcoin.

“There’s no better representation of central bank Bitcoin than this,” he said.

Armstrong responded in a Sept. 14 post on X, defending Coinbase’s transparency about cbBTC and its centralized nature. He pointed out that Coinbase has always been clear about being the custodian of the underlying Bitcoin.

“Not sure what this is all about, TBH,” he said. ”As for cbBTC yes you’re trusting a centralized custodian to store the underlying BTC – we’ve never claimed otherwise.”

Coinbase Believes cbBTC Will Grant Access To DeFi For “Millions Of BTC Holders”

From a technical perspective, cbBTC will serve as a wrapped version of Bitcoin that will compete with Wrapped Bitcoin (WBTC), which currently has a market cap of over $8.9 billion.

Coinbase announced the launch of cbBTC on Sept. 12. The company said that the token follows the ERC-20 standard and is backed 1:1 by BTC that is held by Coinbase.

According to the announcement, the new crypto will enable “millions of BTC holders” to securely access DeFi (decentralized finance) applications hosted on the layer-2 Base network.

cbBTC is onchain.

cbBTC is an ERC20 token that is backed 1:1 by Bitcoin (BTC) held by Coinbase.

This means millions of BTC holders can now securely access DeFi apps on @base and Ethereum ecosystems—with more chains coming soon.

Here’s what you need to know ↓ pic.twitter.com/nF8mF3JGms

— Coinbase 🛡️ (@coinbase) September 12, 2024

Armstrong Addresses ETF IOU Rumors

Amid Sun’s cbBTC remarks, rumors that Coinbase is writing Bitcoin IOUs for BlackRock and suppressing the market leader’s price have also started to circulate on X.

Whatever Coinbase is or isn’t doing, rest assured the ETFs 100% own underlying btc….

It’s real. And it’s spectacular.

That simple. Period. End of story.

Heard same thing back in the day w/ physical gold ETFs.

Anyone perpetuating this stuff doesn’t understand how ETFs work. https://t.co/1msZXUbevn

— Nate Geraci (@NateGeraci) September 14, 2024

Armstrong addressed these concerns in his response to Sun as well, and said that all of the ETF (exchange-traded fund) mints and burns Coinbase processes are “ultimately settled onchain.”

Institutional clients do, however, have trade financing and OTC (over-the-counter) options before their trades are settled on the blockchain within 1 business day.

Armstrong said that anyone who wants to see audits of the exchange’s transactions can refer to the annual audits conducted by the reputable accounting firm Deloitte.

He went on to say that it’s not Coinbase’s place to share the addresses that belong to their institutional clients, who he doubts will “want people dusting all their addresses.”