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

In a September 12 post on X, Justin Sun ripped into Coinbase, saying that the botched Bitcoin launch was a “dark day for BTC.”

Sun said CBBTC has no reserve verification, no audits and the company can freeze anyone's balance at any time. He basically said “Trust me” because any US government subpoena can take all of your BTC.

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

As reported by CryptoPotato, the American crypto exchange cbBTC launched on September 12th on Ethereum and its Layer-2 network.

Sun said he is “friends with many of the founders of the DeFi protocol” and warned that merging cbBTC “creates significant security risks for decentralized finance.”

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

cbbtc=central bank btc. There is no funnier combination in the world than putting central banks and Bitcoin together. I think this is the day Satoshi Nakamoto couldn't imagine inventing Bitcoin.

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

But there is more…

Tron's founder is at the center of the biggest WBTC controversy over the competing product, the current industry standard and the sealed Bitcoin differences. In August, WBTC guardian BitGo announced a partnership with Hong Kong-based BitGlobal to expand escrow operations and cold storage.

Bit Global is an exchange formerly known as Bithumb Global, which is associated with Justin Sun, as confirmed by the joint directors and corporate structures. While there is said to be a decentralized governance structure for WBTC, the larger DAO appears not to have been consulted about the change in custody, Protoss reported at the time.

The new security setup includes control of BitGlobal and BitGo public keys, with recent updates involving BitGo Singapore Ltd.

Sun's lack of transparency about BTC storage and security is related to a competing packaged Bitcoin product on the Tron network. These issues have become a concern in the crypto and DeFi communities that rely on WBTC.

According to the official order book, there are about 152,958 capped Bitcoins on Ethereum. It has a market cap of about $8.8 billion, down 44% from its peak in November 2021.

Sky Drops WBTC

DeFi pioneer Sky, formerly known as Maker, has proposed to extract all WBTC collateral from the Sparkland Liquidity Protocol. In a forum post the group posted on September 12:

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