Coinbase accused of issuing Bitcoin IOUs for BlackRock: CEO responds

Over the weekend, some accounts on X accused Coinbase of collaborating with BlackRock and issuing Bitcoin IOUs. The hypothesis is that the two want to manipulate the price of BTC. Coinbase CEO Brian Armstrong immediately responded and tried to refute the existence of such a conspiracy.

Coinbase and the allegations of issuing Bitcoin bonds for BlackRock: The CEO denies the existence of a conspiracy

Over the weekend, user TylerDurden started on X, Rumors that Coinbase has issued Bitcoin IOUs for BlackRock, in the form of market manipulation.

This “conspiracy” was quickly refuted by Brian ArmstrongCEO of Coinbase, and other senior members of the crypto community.

(During the writing of the article, Tyler Durden's tweet was removed from social media, but we can show the screenshot)

TylerDurden said:

“I've told everyone who's gone through the chain – I mean, it's a public ledger, literally anyone can do it – that Coinbase is issuing IOUs for Blackrock. Now everyone is waking up and hopefully Coinbase will cause a run on the banks. Baldilocks is against Bitcoin.”

While Armstrong replied:

“This is Baldilocks. I'm not sure what the issue is here. All ETFs we manage are ultimately settled onchain. Institutional clients have exchange funding and OTC options before exchanges settle onchain. That's the norm for all our institutional clients. All funds settle in our prime vaults (onchain) within about one business day. If you want an audit, Deloitte audits us annually, we're a publicly traded company. I doubt our institutional clients want all their addresses dusted and it's not our job to release them for them. That's what it looks like if you want a lot of institutional money flowing into Bitcoin. As for cbBTC, it's true that you rely on a central custodian to hold the underlying BTC – we've never claimed otherwise.”

Is Coinbase selling Bitcoin IOUs to BlackRock?

In practice I rumors believe that, since Coinbase is the largest buyer of Bitcoin (BTC), both during price lows and price highs, It may issue bonds to BlackRock.

This would mean that Coinbase would allow BlackRock to lend Bitcoin without providing collateralso the allegations.

BlackRock currently owns over 375,000 BTC and could use this hypothesis to manipulate the BTC price up or down at will.

Put simply, the conspiracy assumes that BlackRock and Coinbase profit from the Bitcoin market by regularly controlling the currency's up and down movements in the $55,000 to $70,000 price range.

However, Armstrong stressed that all of Tyler Durden’s findings were normal and described the procedure and expose the conspiracy theory.

In addition, the Bloomberg analyst and ETF expert Eric Balchunasalso commented on the rumors, but supported Armstrong.

“I understand the reason why these theories exist and people want to mimic the ETFs. Because it's too unthinkable that the domestic HODLers could be the sellers. But it is. The reputation comes from within. All the ETFs and BlackRock have done is repeatedly save the price of BTC from the abyss.”

The launch of Wrapped Bitcoin cbBTC

A few days earlier Coinbase started its version of Wrapped Bitcoin, the cbBTC.

This is a tool designed to bring the potential of Bitcoin to the growing DeFi ecosystem to Ethereum and Basethe Layer 2 blockchain developed by Coinbase.

With cbBTCCoinbase enters the Wrapped Bitcoin market and launches a direct challenge to WBTC, the industry leader issued by BitGO.