Coinbase Unveils Proof of Reserves for cbBTC Amid Transparency Concerns

Coinbase has introduced Proof of Reserves (PoR) for its cbBTC token, aiming to assure users that each cbBTC is backed 1:1 by Bitcoin. This move comes amid growing concerns about transparency and the risks of centralized control in the crypto industry.

According to Coinbase’s PoR data, the exchange holds 26,525.15 BTC to support a cbBTC supply of 26,461.05 tokens. These tokens are spread across multiple networks, with Ethereum hosting the largest share at 16,080 cbBTC. Other distributions include 7,655.391 cbBTC on Base, 2,673.489 cbBTC on Solana, and 51.395 cbBTC on Arbitrum. To further enhance transparency, Coinbase revealed its Bitcoin addresses and balances. The largest wallet holds 690 BTC, while 40 others contain 480.984 BTC each, with the rest distributed among smaller wallets.

This announcement follows criticism from the crypto community, particularly from Tron founder Justin Sun. He previously attacked cbBTC for its lack of transparency and control mechanisms, warning that centralized custody could lead to asset seizures if authorities intervene. Sun claimed cbBTC had no audits and could freeze balances at any time. "Essentially, it’s just ‘trust me.’ Any US government subpoena could seize all your BTC," he warned.

Although Coinbase’s PoR provides some reassurance, skepticism remains. Some users pointed to past issues with Solana transactions on the platform. One user on X questioned Coinbase’s reliability, stating, "You also talked about Proof of Reserve for Solana, but it turned out to be wrong, and our transactions were stuck for over 24 hours." This refers to a recent incident where Solana deposits and withdrawals faced delays exceeding 14 hours. Critics speculated that Coinbase was staking users’ SOL without consent, causing liquidity shortages when users attempted to withdraw.

Another user summarized the issue, stating, "Deposit SOL to Coinbase, they take your SOL and stake it for profit. But if everyone wants their SOL at the same time, they don’t have it."

Coinbase attributed the delays to "technical and blockchain issues." However, users continue to demand more transparency, calling for concrete evidence that their assets remain liquid and accessible. Many believe centralized exchanges must improve their accountability, particularly in managing customer funds.

The launch of PoR for cbBTC is a step toward rebuilding trust, but ongoing scrutiny suggests that users remain cautious when using centralized platforms to store and trade their assets.