Coinbase CEO Brian Armstrong quelled concerns about the state of his company’s Bitcoin holdings on Tuesday, following doubtful suggestions from rival exchange owner Changpeng Zhao (CZ).
Binance’s CEO has since deleted his tweet, promising to “work together to improve transparency in the industry.”
What Did CZ Say?
CZ’s now-removed post called attention to two separate claims about the exact number of Bitcoin held by Coinbase.
The first was a statement from Coinbase Custody CEO Aaron Schnarch on Monday, stating that the company held 635,000 BTC on behalf of the Grayscale Bitcoin Trust (GBTC). The second, by contrast, was a 4-months old headline about Coinbase’s exchange holding less than 600,000 BTC.
“Just stating news reports, not making any claims,” said CZ. “Glassnode probably has more up-to-date data.”
Concerns around both Grayscale and Coinbase began brewing over the weekend after the former refused to implement on-chain proof-of-reserves for its crypto holdings, alongside a handful of other centralized firms.
The transparency measure is intended to ensure creditors that their deposits are fully backed, and not secretly being mismanaged as is suspected of the now defunct exchange FTX.
Even still, Twitter’s crypto community considered his suggestive tweet to be both ignorant and uncalled for. For example, Messari founder Ryan Selkis pointed out that Coinbase already had audited financials proving it held roughly 2 million Bitcoin.
Binance’s CEO ultimately removed the tweet after receiving a DM from Brian Armstrong detailing those same financials.
“If you see FUD out there – remember, our financials are public (we’re a public company),” clarified Armstrong in a follow-up tweet. Documents provided by the CEO showed his company held roughly $39.9 billion in Bitcoin by the end of Q3 2022.
Contrasting Coinbase With FTX
CZ’s statement comes 16 days after publishing tweets that arguably sparked the bank run on FTX, which led to its rapid demise. Some interpreted Monday’s tweet as a deliberate attempt to take down another competitor, though CZ denied such intentions.
During the week of FTX’s collapse, Brian Armstrong explained that Coinbase’s public auditing and 1:1 backing of customer assets would prevent it from possibly going under like FTX. He said Coinbase held no exposure to FTX, FTT, or its sister company Alameda Research at the time.
Days before bankruptcy, former FTX CEO Sam-Bankman-Fried claimed FTX backed customer assets 1:1, and that it had heavily regulated GAAP audits. He has since deleted the tweets making those claims.
“If an exchange holds users’ assets as is, no amount of other people’s tweets will cause problems. Simple,” said CZ last Thursday.