There is no real evidence supporting claims that Coinbase facilitated market manipulation with BlackRock.
Rumors have circulated that Coinbase is issuing Bitcoin IOUs to BlackRock, which purportedly allows the financial firm to manipulate the market by borrowing Bitcoin without maintaining a 1:1 reserve.
This speculation has raised concerns about potential price manipulation, particularly given the size and importance of Coinbase and BlackRock in the cryptocurrency market.
Analyst Tyler Durden, among others, has publicly accused Coinbase of supporting these operations, implying that BlackRock may utilize these borrowed Bitcoin tokens to short the market, causing volatility.
In response to these charges, Coinbase CEO Brian Armstrong has categorically denied all wrongdoing. He highlighted that the minting and burning of Bitcoin for BlackRock's ETF is done transparently and on-chain. Furthermore, all transactions are audited on a regular basis, and the results are made public for verification.
Armstrong further stated that Coinbase's confidentiality agreements with large clients, like BlackRock, preclude it from exposing the addresses and detailed information of their transactions. These statements are intended to eliminate any perception that Coinbase is participating in market manipulation.
Furthermore, the rumors are false, and there is no real evidence for such claims or that such operations are going on, as has been stated by blockchain researcher Collin Brown.
Many in the industry have examined the blockchain for actual evidence but have found nothing to back up these charges. As a result, the rumors appear to be false and based on supposition rather than facts.
The transparency initiatives launched by Coinbase to build trust in their handling of sizable transactions, particularly those involving significant organizations like BlackRock, support this opinion.
Despite the lack of evidence, the proliferation of these allegations has fueled concerns about institutional investors effect on the Bitcoin price. Historically, some traditional investors have been blamed for contributing to market downturns, but others claim that they have helped to stabilize the coin price.
Bloomberg analysts, for example, believe that the emergence of Bitcoin ETFs, especially those tied to BlackRock, has helped to stabilize the market by attracting new, long-term investors. These ETFs have also enabled more efficient capital flows into Bitcoin, which can help keep the price stable during moments of volatility.
On the other hand, CNF previously highlighted Coinbase CLO Paul Grewal, who criticized the SEC's inconsistency in classifying crypto tokens as securities in a surprising legal change. Grewal highlighted the SEC's confusion about Ethereum's special treatment, which left the crypto community in limbo.