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Tron founder Justin Sun has stressed the need for Coinbase to adopt a Proof-of-Reserve (PoR) for better transparency. The Tron founder questions why the US-based crypto exchange fails to implement a PoR despite rivals like Binance adopting the same.
Tron founder highlighted the need for transparency, noting that simply revealing wallet addresses can bolster trust and investor confidence in the industry.
These remarks come amid a recent controversy connected to BlackRock’s alleged recurrent borrowing of Bitcoin without collateral.
Tron Founder Calls Out Coinbase Over Failure to Implement PoR
In an X post, Sun pointed out the growing adoption of the Proof-of-Reserve system in the crypto industry. He questioned why Coinbase failed to adopt the strategy when other exchanges, including top players like Binance, have done it.
Sun’s remarks come after Coinbase refuted rumors of issuing BTC IOUs to asset management firm BlackRock. Over the weekend, a crypto analyst, Tyler Durden, accused Coinbase of allowing Blackrock to borrow Bitcoin without collateral.
The analysts said such a situation could lead to market manipulation, allowing BlackRock to profit from the resultant price fluctuations. Tron founder Justin Sun weighed in on the matter, criticizing Coinbase for issuing new wrapped Bitcoin cbBTC without any proof-of-reserves.
Sun said a lack of PoR could allow the US government to subpoena the exchange and seize the assets.
However, Coinbase CEO Brian Armstrong quickly debunked such rumors. He explained that the ETF minting, burning, and settlements are done on-chain within one business day. The CEO also said institutional clients could use over-the-counter or trade financing options in advance before settling trades.
Coinbase CEO just admitted that you got to trust them on their word.
They will not provide any proof of reserves for the BTC they *claim* they have, nor any proof of backing for their new paper BTC called cbBTC.
If they print too much paper BTC they will go the FTX route. pic.twitter.com/quYklYgNxN
— Duo Nine ⚡ YCC (@DU09BTC) September 15, 2024
Armstrong also noted that Coinbase is a public company audited annually by Deloitte. He said their institutional clients might not appreciate people viewing all their addresses, so it’s not in Coinbase’s place to share. Following this explanation, Tyler took down his post.
Additionally, James Sayffart, an ETF analyst at Bloomberg, described the rumors as baseless and conspiracy theories. According to Sayffart, ETF issuers, including BlackRock, publicly publish digital wallet addresses for improved transparency.
Bloomberg’s senior ETF analyst, Eric Balchunas, also weighed in on the debate. Balchunas said BlackRock’s participation in Coinbase’s cbBTC project adds credibility. According to the analyst, BlackRock won’t tolerate foul play or mismanagement in handling Bitcoin reserves as a reputable asset manager.
People keep asking me if I believe him. Yes I do. Mostly bc BlackRock isn’t playing around folks. They would flip out if $COIN was screwing around w their btc, plus it would violate the '33 Act. The reason this 'theory' is a thing is two-fold: 1) Bitcoiners looking for scapegoat… https://t.co/VrklFi9yxN
— Eric Balchunas (@EricBalchunas) September 16, 2024
Proof-of-Reserves Enhances Transparency and Promotes Trust, Says Tron Founder
Meanwhile, in his post, Sun said the crypto community doesn’t need perfection but only expects transparency. The Tron founder noted that revealing all wallet addresses related to the Bitcoin reverse is relatively simple. So, he doesn’t understand why Coinbase thinks it’s not feasible.
Sun cited the FTX fiasco as an example. FTX reportedly relied on audit firms for security, which doesn’t guarantee the safety of funds on-chain. He further noted that being a public company won’t prevent bankruptcy, citing the collapse of Signature Bank as an example.
Sun opines that Coinbase implementing PoR is an effective self-regulation method and fosters trust within the crypto industry.
While Coinbase has yet to address these allegations clearly, crypto industry members expect relevant steps to clarify the BTC reserve issues.
Meanwhile, the crypto market has slightly recovered from Monday’s slump, with Bitcoin briefly surpassing $61,000 on Tuesday. While there have been some pullbacks, Bitcoin remains above $59,000, vying to reclaim the $60,000 threshold again. Bitcoin trades at $59,902, a 1.29% increase
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