Justin Sun Raises Major Alert On Coinbase Wrapped Bitcoin As cbBTC Rockets 93%

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As a seasoned crypto investor with a keen eye for detail and a penchant for understanding the inner workings of this dynamic industry, I find Justin Sun’s concerns about Coinbase’s cbBTC intriguing. His emphasis on transparency and accountability resonates deeply with me, given my past experiences with less-than-reliable platforms.

The debut of Coinbase’s wrapped Bitcoin (cbBTC) on the Binance Smart Chain, which is only 24 hours old, is stirring up a bit of controversy. Justin Sun, founder of Tron, has expressed several concerns about the new product and has not hesitated to share them publicly. Some of his followers appear to be in agreement with Sun’s perspective on Coinbase cbBTC.

Justin Sun Concerned About cbBTC Transparency

As a crypto investor, I’ve noticed Justin Sun’s concern about the Proof-of-Reserve (PoR) for Coinbase’s product, specifically cbBTC. Sun argues that there are no audits in place for this service, which means they could potentially freeze my balance without any prior warning. He refers to this system as a “trust me” model, implying it lacks evidence to ensure accountability. Essentially, he’s saying that without transparent proof, it’s hard to hold Coinbase responsible for the security of our investments.

In the U.S., any legal summons (subpoena) has the power to confiscate your Bitcoins. This scenario underscores the notion that Bitcoin is as much under the control of central banks as any other traditional currency. Today marks a somber day for Bitcoin, according to Sun’s observation.

To provide context about the cryptocurrency causing some apprehension, the American cryptocurrency platform Coinbase introduced cbBTC on the Base layer, effectively bringing a portion of Bitcoin onto the Layer-2 network. In their official statement, they mentioned that the wrapped BTC token will be compatible with both the L2 network and Ethereum. Furthermore, the ERC20 token is guaranteed to have an equivalent value (1:1) to the Bitcoin (BTC) held by the digital currency exchange.

Coinbase explained that the introduction of cbBTC would provide BTC owners with greater financial flexibility when managing their assets. They aim to make this wrapped version of Bitcoin accessible on platforms such as Compound, Morpho, Moonwell, and Spark. The launch of this product caused a significant surge in the value of the unrelated cbBTC token, pushing it up by more than 93% to reach $0.000153.

Purpose of Proof-of-Reserve

It’s important to highlight in the world of cryptocurrency that issues like those pointed out by Justin Sun are not overlooked. They gained significant importance following the collapse of Terra/LUNA in 2022 and the subsequent downfall of the Bahamian-based crypto exchange FTX in the same year.

As time goes by, it’s essential to provide PoR reports to maintain the openness and financial well-being of a protocol.

Crypto platforms such as Binance frequently publish Proof-of-Reserves (PoR) reports. Just recently, this major player in digital asset services unveiled its 22nd report on Proof-of-Reserves. This report revealed that the exchange’s Bitcoin holdings relative to user balances is currently at 106.84%.

According to the Proof of Reserve (PoR), users collectively hold approximately 4,486,359.895 Ethereum (ETH). This represents a holding ratio of about 103.68%. It’s uncertain if Coinbase will reveal their cbBTC PoR following the allegations made by Justin Sun, as this information has yet to be confirmed.

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2024-09-12 21:20