Jesse Pollak, Vice President of Development at Coinbase, actively participated in a discussion on platform X, refuting allegations that Coinbase is intentionally selling Ethereum.
The creator of Base informed anyone interested that this exchange is the world's largest holder of Ethereum.
How an "Inappropriate" Remark Started the Controversy
The controversy erupted when user chaskin.eth (@jchaskin22) stated that the dissatisfaction with Ethereum on Twitter towards Coinbase is "completely unjustified," comparing this anger to a situation where a company attacks its largest clients because they decided not to buy a majority of its shares.
Pollak agreed with these sentiments, stating that he is "astounded" that Coinbase is being attacked over $ETH sales.
Not everyone liked this. User cyp.eth (@0xcyp) responded to praise from venture investor Nick Tomaino for Coinbase, calling the company "aligned in values with Ethereum," by stating that the company's values include "constantly selling $ETH from order execution fees into USD and BTC."
This response fully captures all the dissatisfaction with the company: the people managing Base earn ETH and then, allegedly, sell the proceeds, investing them in other assets.
Pollak's Defense Based on 'Orders of Magnitude'
Avoiding discussion of specific transactions, Pollak framed his argument based on scale. In his view, Coinbase is "the largest non-specialized digital asset management tool holder of $ETH, orders of magnitude ahead of competitors," meaning it holds more $ETH than any other comparable non-specialized digital asset management tool.
He added that "Coinbase has literally been holding 150,000 $ETH for many years." The company has held it through market cycles and shifting views on whether Layer 2 networks are the future of Ethereum or not.
Official statistics align with Pollak's arguments. Coinbase is listed on the $ETH Reserve tracker in sixth place, behind specialized treasury companies like Bitmine Immersion Tech, which holds over 5.5 million $ETH.
Where Sequencer Revenue Goes
The criticism focuses specifically on Coinbase. Coinbase operates the network's sequencer, a component responsible for ordering and processing transactions. The sequencer receives fees in $ETH; these fees are then converted to dollars or Bitcoin, and outsiders see Coinbase's actions as diminishing the value of Ethereum rather than enhancing it.
Others note that the company holds Bitcoin on its balance sheet, while treating Ether as an operational asset rather than a long-term investment strategy.
Chaskin.eth agreed with this opinion on priorities and previously stated that approximately 75% of Coinbase's revenue comes from Bitcoin trading and storage, expressing hope for that figure to change.
The Environmental Aspect
In response, Pollak argues that treasury calculations ignore the bigger picture. He credited Coinbase for implementing EIP-4844, an update that reduced Layer 2 costs by publishing "blob" data, as well as for participating in the creation of USDC, one of the largest stablecoins.
He also emphasized the millions of users the exchange has brought into Ethereum, stating that reach is more important than any individual balance sheet decision.
The Base network was launched in 2023 and is currently one of the busiest Layer 2 networks on the Ethereum network, having just reached the first stage of decentralization, which reduces Coinbase's direct control over the blockchain's operation.
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