Armstrong defends Coinbase: the truth about ETFs and investor concerns

Brian Armstrong, CEO of Coinbase, has actively defended his platform amid growing allegations of market manipulation related to Bitcoin. Last week, several high-profile statements prompted the investment community to reconsider their stance on spot Bitcoin ETFs and the operations of centralized cryptocurrency platforms. Armstrong responded clearly and in detail to the questions raised.

Where Did Suspicion of “Paper” Bitcoin Come From?

The wave of criticism started with a tweet from well-known crypto analyst Tyler Dürden, who claimed that Coinbase allowed BlackRock — the largest issuer of spot Bitcoin ETFs — to hold Bitcoin without proper collateral. According to him, this created opportunities for market manipulation and profit from sharp price swings. Almost simultaneously, TRON founder Justin Sun expressed concern about Coinbase’s new product — cbBTC (Wrapped Bitcoin). Sun argued that this instrument resembles a traditional centralized system: there are no public reserve confirmations, no independent audits, and the platform can freeze customer balances at any time. “Any US government agenda could confiscate all your BTC,” Sun wrote, calling this “a black day for Bitcoin.”

Coinbase’s Direct Denial

Armstrong quickly responded to the suspicions. The Coinbase CEO explained key points about how spot Bitcoin ETFs operate. He stated that all issued ETFs go through a creation, redemption, and registration process on the blockchain within one business day. This means each ETF is backed by actual Bitcoin. Additionally, Armstrong noted that institutional clients do indeed have access to trading financing and OTC options before full settlement — a standard practice in the financial industry that does not imply the creation of “paper” assets. His clear explanation dispelled major concerns, and Tyler Dürden later deleted his critical tweet.

ETF Market Experts’ Position

Industry analysts unanimously sided with Coinbase. James Seifart, a Bloomberg ETF specialist, told CoinDesk that these accusations are a typical example of unfounded theories circulating in the community. “This is just another poorly substantiated view on how ETFs work,” Seifart said, emphasizing that such rumors periodically arise due to a lack of understanding of the mechanisms of these instruments.

However, experts did acknowledge some valid points of criticism. Seifart and his colleagues called for increased transparency in the industry. They urged major issuers, including BlackRock, to publish the addresses of digital wallets holding Bitcoin reserves. This measure would allow investors to independently verify collateral presence and would boost overall market trust.

What Is Being Done to Improve Transparency

Not all market players remain passive. Bitwise demonstrated best practices in transparency by becoming the first issuer of spot Bitcoin ETFs to openly publish wallet addresses for both their Bitcoin funds and spot Ethereum funds. This approach received high praise from the professional community and shows that even under current regulations, greater openness is possible.

Eric Balchunas, senior Bloomberg analyst, highlighted the need for critical self-assessment within the Bitcoin community. He pointed out that criticism of ETFs often comes from investors who are ideologically skeptical of centralized financial institutions and government agencies. “People investing in Bitcoin tend to be skeptical of authority and institutions, which I understand, but objective analysis is important here,” Balchunas wrote. He also emphasized that BlackRock, as a major investment firm, would never allow itself to manipulate Coinbase assets — the company would simply lose its reputation.

Issues with Crypto Lending Platforms

Alongside the ETF discussion, significant changes occurred in the crypto lending market. Nicholas Hammer, co-founder of the platform Blockfills, stepped down as CEO. Blockfills, a Chicago-based company that processed over $60 billion in trading volume in 2025, faced serious difficulties. According to informed sources, some clients were advised to withdraw their assets before the platform froze all deposits and withdrawal operations on February 11. The company was affected by the overall market downturn and is currently seeking a potential buyer.

Final Conclusions

The story surrounding cbBTC and manipulation allegations highlights the importance of transparency and professional communication in the crypto industry. Armstrong’s response and the position of leading analysts confirmed that current mechanisms are functioning correctly. At the same time, the growing demand for wallet address transparency indicates that the industry is ready to move toward even greater openness to attract conservative investors and strengthen trust in spot Bitcoin ETFs.