Coinbase founder and CEO Brian Armstrong has denied speculation that the company sold paper bitcoins to BlackRock and did not maintain a 1:1 backing.

In a statement on X addressed to cryptocurrency analyst Tyler Durden, Armstrong explained that the bitcoin minting and burning for BlackRock's spot bitcoin ETF were transparent and on-chain. Durden had shared data from Cryptoquant showing that Coinbase was the largest buyer and seller at market highs and lows.

Furthermore, he implied that the exchange allowed BlackRock to borrow bitcoin without providing collateral. Since BlackRock is one of the world's largest bitcoin holders, the analyst suggested that the two companies could profit by controlling the cryptocurrency's falls and rises.