Coinbase has decided to take advantage recent controversies surrounding WBTC’s decision to involve Justin Sun to launch its own wrapped bitcoin project, Coinbase Wrapped BTC (cbBTC).
This new token is offered on both Ethereum and Coinbase’s own Base network. Coinbase will treat it as equivalent to normal BTC in its orderbooks, and Coinbase users can obtain cbBTC by withdrawing Bitcoin on either Ethereum or Base, and it will be automatically converted.
Coinbase’s website says that this asset can already be used across the Decentralized Finance (DeFi) ecosystem, including Aerodrome, Curve, Aave, Compound, Spark, and more.
CoinMarketCap indicates that the current marketcap for this token is approximately $100 million.
cbBTC, WBTC, and Bitcoin-on-Tron
cbBTC competitor WBTC has attracted additional scrutiny since announcing that Sun and a custodian he advises, BiT Global, were getting involved with the project.
This announcement initially led some DeFi projects, including Maker, to re-consider how WBTC was treated in the protocol, centering around fears of Sun’s reliability.
Sun has already taken to X to share his disappointment with this new competitor, complaining that cbBTC “lacks Proof of Reserve, no audits, and can freeze anyone’s balance anytime. Essentially, it’s just ‘trust me.’ Any U.S. government subpoena could seize all your BTC. There’s no better representation of central bank Bitcoin than this. It’s a dark day for BTC.”
This is a somewhat ironic stance for Sun to take, considering the Bitcoin on Tron product offered by Poloniex, a cryptocurrency exchange he owns.
Sun had previously promised that Poloniex would have a ‘proof-of-reserves’ but has failed to provide that in the almost two years since that promise was made.
Additionally, Poloniex offers its own version of wrapped bitcoin, commonly described as ‘Bitcoin-on-Tron’, which is substantially larger than WBTC on Tron. Protos has previously reached out to Poloniex to determine where the bitcoins for this product are held, and Poloniex was unwilling to disclose that information.
Despite this troubling lack of disclosure, Sun-advised HTX (formerly Huobi) holds more than half of its current bitcoin reserves in this Poloniex-offered product.