1. Accusations and Brian Armstrong's Response
2. Analysts' Opinions and Criticism
3. Current Bitcoin Market Situation

Coinbase CEO Brian Armstrong and leading analysts quickly dismissed allegations that the company was issuing Bitcoin IOUs to BlackRock, the issuer behind the largest spot Bitcoin ETF.

Accusations and Brian Armstrong's Response

Over the weekend, crypto analyst Tyler Durden accused Coinbase of allowing BlackRock to borrow Bitcoin without collateral, raising concerns over potential market manipulation and price volatility. Durden’s claims gained traction following a post by Tron founder Justin Sun, who criticized Coinbase’s wrapped Bitcoin product, cbBTC, for lacking Proof of Reserves and the ability to freeze balances. Sun warned that U.S. government intervention could result in the seizure of Bitcoin assets. Armstrong clarified that ETF transactions were conducted on-chain, with assets minted and burned, and settled within one business day. He added that institutional clients had access to trade financing and over-the-counter options before the final settlement. Durden later deleted his tweet following Armstrong’s explanation.

Analysts' Opinions and Criticism

Bloomberg ETF analyst James Seyffart dismissed the rumors as “baseless conspiracy theories,” noting that issuers like BlackRock and Bitwise have taken steps to increase transparency by publicly sharing digital wallet addresses for their Bitcoin and Ethereum funds. Senior ETF analyst Eric Balchunas also criticized Bitcoin investors for blaming ETFs for recent market fluctuations, urging them to reflect on their actions instead. He emphasized that BlackRock, as a major asset manager, would not tolerate any misconduct from Coinbase.

Current Bitcoin Market Situation

The allegations were quickly debunked, with industry analysts reaffirming the legitimacy of Coinbase and BlackRock’s operations. Despite the initial concerns, the situation highlighted the ongoing mistrust among Bitcoin investors towards government involvement, centralized exchanges, and large financial institutions. Meanwhile, Bitcoin is trading at $60,250 with a 4% surge in the past 24 hours, and in the same timeline, the trading volume is up 39%.

The situation with the allegations against Coinbase and BlackRock underscores the importance of transparency and trust in the cryptocurrency market. Despite the quick disavowal of the accusations, the incident shows how crucial information and the willingness of market participants to engage in dialogue are.