Coinbase’s recent launch of its wrapped Bitcoin product, cbBTC, has stirred controversy within the crypto community. TRON founder Justin Sun has criticized the new offering, raising concerns about its lack of transparency and security risks.
Justin Sun’s Concerns
Sun argued that cbBTC lacks proof of reserves, proper audits, and gives Coinbase the power to freeze user balances. He warned that a single government action could result in the seizure of all Bitcoin backing cbBTC, dubbing it “central bank Bitcoin.”
Coinbase Defends cbBTC
In response, Coinbase assured users that cbBTC is fully backed 1:1 by Bitcoin, held securely with no risk of rehypothecation (lending or reinvesting user funds). The exchange emphasized that its rigorous security measures would protect users' Bitcoin reserves.
Growing Competition in Wrapped Bitcoin Market
Coinbase’s cbBTC enters a crowded market, competing with WBTC, the largest wrapped Bitcoin product. Controversies surrounding WBTC’s custodianship have raised concerns about the security and centralization of wrapped Bitcoin tokens, fueling debates within the DeFi space.
Source:
Decrypt
