Justin Sun Lambastes Coinbase’s ‘Central Bank Bitcoin’ Amid WBTC Controversy

In a post on X on September 12, Justin Sun slammed Coinbase, claiming that its botched Bitcoin launch was a “dark day for BTC.”

Sun said that cbBTC has no proof of reserve, no audits, and the company can freeze anyone’s balance at any time. He said it’s basically “just trust me” since any subpoena from the US government could seize all of your BTC.

“There is no better representation of the Bitcoin central bank than this.”

The US crypto exchange launched cbBTC on Ethereum and its Base Layer 2 network on September 12, CryptoPotato reported.

Sun said he was “friends with many founders of the DeFi protocol” and warned that the integration of cbBTC “will pose huge security risks to decentralized finance.”

“There is no more ridiculous combination in the world than joining central banks and Bitcoin together. I imagine this is a day that Satoshi Nakamoto could never have imagined when he created Bitcoin,” Sun continued.

cbbtc=central bank btc. There is no more ridiculous combination in the world than central banks and Bitcoin. I imagine this is a day that Satoshi Nakamoto could never have imagined when he created Bitcoin. https://t.co/bi7EkKznpn

— HE Justin Sun (hiring) (@justinsuntron) September 12, 2024

But there is more…

The founder of Tron is in the middle of a controversy surrounding the rival product, the current industry standard and the largest of the wrapped Bitcoin variants, WBTC. In August, WBTC custodian BitGo announced a partnership with Hong Kong-based BitGlobal to diversify custody and cold storage operations.

BitGlobal is the exchange formerly known as Bithumb Global, which has connections to Justin Sun, as evidenced by shared directors and corporate structures. Despite claims of a decentralized governance structure for WBTC, it appears that the larger DAO was not consulted about the change of custody, Protos reported at the time.

The new custody setup involves BitGlobal and BitGo sharing control of the keys, with recent modifications to include BitGo Singapore Ltd.

Sun is also associated with a competing wrapped Bitcoin product on the Tron network, which allegedly lacks transparency about its BTC storage and security. These issues have been a cause for concern in the crypto and DeFi communities that rely on WBTC.

There are around 152,958 Bitcoins wrapped in Ethereum, according to the official order book. It has a market cap of about $8.8 billion, down 44% from its November 2021 peak.

Sky Drops WBTC

DeFi pioneer Sky, formerly known as Maker, has proposed removing all WBTC collateral from its SparkLend liquidity protocol. In a forum post on September 12, the team stated:

“Based on available evidence, it is highly likely that Justin Sun or his affiliates control BitGlobal, with ownership hidden through shell companies and nominee directors.”

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