Justin Sun Rips into Coinbase Wrapped Bitcoin Launch, Calls It a 'Dark Day for BTC'

In a post on X on Sept. 12, Justin Sun let rip at Coinbase, stating that its wrapped Bitcoin launch was a “dark day for BTC.”

CryptoPotato reported on Monday that Coinbase (NASDAQ:COIN) has launched its own wrapped Bitcoin on Ethereum and its layer-2 network, Base. The new product is called cbBTC.

Justin Sun, the founder of Tron (TRX), took to X on Sept. 12 to comment on the launch, stating that it is a “dark day for BTC.”

Sun said that cbBTC lacks proof-of-reserve, has no audits, and the company can freeze anyone’s balance anytime. He said it essentially is “just trust me,” as any U.S. government subpoena could seize all of your BTC.

“There’s no better representation of central bank Bitcoin than this,” he added.

Sun also cautioned that integrating cbBTC “will pose major security risks to decentralized finance,” adding that he is “friends with many DeFi protocol founders and they all have a headache now.”

“There is no more ridiculous combination in the world than putting central banks and Bitcoin together. I imagine this is a day Satoshi Nakもと could never have envisioned when creating Bitcoin,” Sun continued.

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

— H.E. Justin Sun(hiring) (@justinsuntron) September 12, 2024

Sun’s comments come as his rival product, the largest of the wrapped Bitcoin variants, faces scrutiny over a change in custody.

In August, BitGo, the custodian of the largest wrapped Bitcoin product WBTC, announced a partnership with BitGlobal to diversify custody operations and cold storage.

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, Protos reported at the time that the large DAO was not consulted about the change in custody.

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

There are also concerns over a competing wrapped Bitcoin product on the Tron network, which is said to lack transparency about its BTC storage and security. These issues have raised red flags within the crypto and DeFi communities.

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

Sky Drops WBTC

Meanwhile, DeFi pioneer Sky, formerly known as Maker, has proposed removing all WBTC collateral from its SparkLend liquidity protocol.

“Based on available evidence, it is highly likely that Justin Sun or affiliates control BitGlobal, with ownership concealed through shell companies and nominee directors,” the team wrote in a forum post on Monday.

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