Coinbase Introduces Proof of Reserves for cbBTC Token
In response to mounting concerns over transparency, Coinbase has unveiled a Proof of Reserves (PoR) for its wrapped Bitcoin token, cbBTC. This move aims to assure users that each cbBTC is backed 1:1 by Bitcoin (BTC) held by the exchange.
According to the PoR data, the Coinbase exchange holds a total reserve of 26,525.15 BTC, with a corresponding cbBTC supply of 26,461.05 tokens. The distribution of cbBTC across various networks is as follows: Ethereum hosts 16,080 cbBTC, Base contains 7,655.391 cbBTC, Solana holds 2,673.489 cbBTC, and Arbitrum has 51.395 cbBTC.
Coinbase also disclosed the specific Bitcoin addresses and their balances, enhancing the transparency of its reserves. According to the data, the wallet holding the largest portion of these reserves contains 690 BTC, worth approximately $65.8 million at current rates. Meanwhile, 40 wallets hold 480.984 BTC each. The remaining BTC is distributed among several other wallets.
Industry Reactions to cbBTC Proof of Reserves
This development comes on the heels of criticism from prominent figures in the cryptocurrency community. Justin Sun, founder of Tron, previously lambasted cbBTC for its perceived lack of transparency and centralization. As COINOTAG reported, Sun expressed concerns that cbBTC lacked Proof of Reserve, was unaudited, and could freeze balances at any time. Sun warned that such centralized control could lead to asset seizures in response to government actions.
“cbBTC lacks Proof of Reserve, no audits, and can freeze anyone’s balance anytime. Essentially, it is just ‘trust me.’ Any US government subpoena could seize all your BTC. There is no better representation of central bank Bitcoin than this. It’s a dark day for BTC,” Justin Sun wrote on X.
User Concerns Persist Despite Transparency Efforts
While Coinbase’s introduction of PoR for cbBTC addresses some transparency issues, user apprehensions persist. “You also talked about proof of reserve for Solana but it happened to be wrong and our transactions were stuck for over 24 hours,” a user on X challenged.
The user references recent incidences involving delays in Solana (SOL) transactions on the platform, causing execution waits exceeding 14 hours. This led to speculation that Coinbase might be staking users’ SOL without consent, causing delays due to the unstaking process. Such practices have raised questions about the exchange’s liquidity and operational integrity.
“Deposit SOL to Coinbase, they take your SOL and stake it to earn yield off your deposits, and oops — if everyone wants SOL all at once, they don’t have your liquidity,” one user summarized.
Notably, Coinbase Support ascribed the delays to “technical and blockchain issues.” Nevertheless, users called for clear evidence of its liquidity and operational integrity. In light of these events, the cryptocurrency community continues to advocate for increased transparency and accountability from centralized exchanges.
Conclusion
Coinbase’s implementation of cbBTC Proof of Reserves is a step toward rebuilding trust. However, ongoing scrutiny suggests that users remain vigilant about managing and securing their assets on such platforms. Ensuring transparency and operational integrity will be critical for stakeholders within the cryptocurrency ecosystem as they move forward.
