Coinbase Wrapped Bitcoin Sparks Pushback from Justin Sun

Coinbase’s launch of its Speaking with “cbBTC lacks Proof of Reserve, no audits, and can freeze anyone’s balance anytime, Sun stated on Twitter. “Essentially, it’s just, ‘Trust me.’” Sun’s criticism of cbBTC is rooted in recent controversies surrounding wrapped Bitcoin products, particularly involving WBTC (Wrapped Bitcoin), This move sparked criticism within the crypto community due to BiT Global’s connections to Sun, who has been a Amid the uncertainty, Investment firm 21shares also announced its own wrapped Bitcoin called 21BTC.“While WBTC played an important role in DeFi adoption over the years, it has not kept up with the evolution of the tech and governance in the space,” Vijay Pravin Maharajan, CEO of bitsCrunch, said the overall approach also raises concerns.”There are inherent vulnerabilities associated with wrapped Bitcoin assets, which rely on custodians or intermediaries to hold the underlying Bitcoin, which introduces a level of centralization and trust risk,” he said.Maharajan added that smart contract vulnerabilities on the blockchain where cbBTC is used could expose the asset to exploits, such as bugs or hacking incidents in the code.Coinbase, meanwhile, asserted its strengths to Decrypt.“While we can’t speak to any other wrapped BTC asset, what we can tell you is that Coinbase will not be giving up custodial key control [and] Coinbase will not unilaterally use or move any BTC backing cbBTC for rehypothecation (e.g. lending) or investment purposes,” the spokesperson said.“Our industry-leading security and operational practices will prevent any malicious intents targeted towards the BTC reserves backing cbBTC. Coinbase follows jurisdictional requirements and reporting to ensure cbBTC always remains trusted with regulators,” the spokesperson added. Hours after launching cbBTC, Coinbase issued a warning about nefarious actors purporting to be cbBTC.