Coinbase Responds to wBTC Delisting Lawsuit, Citing Justin Sun Risks

Highlights:

• Coinbase cites Justin Sun’s involvement and ownership risks as reasons for the wBTC delisting.
• BiT Global accuses Coinbase of monopolistic tactics to promote its own token, cbBTC.
• The court filing highlights Coinbase’s minimal wBTC trading volume and BiT Global’s delayed lawsuit filing.

Coinbase has come out to stand by its decision to delist Wrapped Bitcoin (wBTC) from its platform in a lawsuit filed by BiT Global. The lawsuit filed on December 13th stated that the delisting is anticompetitive and intends to harm WBTC’s market standing. According to BiT Global, this move benefits Coinbase’s own tokenized Bitcoin, known as Coinbase Wrapped Bitcoin (cbBTC).

BiT Global also claims that Coinbase defamed them and used predatory measures. According to the custodian, the wBTC delisting would lead to economic losses, including a loss of $1 billion in market valuation. It also requested an emergency injunction to reverse the decision.

Coinbase’s Legal Response

Coinbase submitted its response on December 17, while completely dismissing all the allegations made. According to the cryptocurrency exchange, the delisting was due to internal risk assessments and doubts about the control of BiT Global. The filing also pointed to the role of Justin Sun, the founder of TRON, who the source says wields considerable control over the project.

We've filed our response to BiT Global’s effort to stop our delisting of wBTC before any discovery or even formal response to their bogus claims. We lay out why this lawsuit lacks any semblance of merit and why their request for a TRO should be denied. You can read it all for…

— paulgrewal.eth (@iampaulgrewal) December 17, 2024

The company pointed out Sun’s previous cases of financial improprieties, for example, the charges levelled against the company by the U.S Securities Exchange Commission and ongoing federal investigations. Coinbase said that such connections posed risks and were inconsistent with its compliance program.

Moreover, Coinbase also highlighted that wBTC transactions represented less than 1% of the whole trading volume on its platform. This, the exchange pointed out, weakens BiT Global’s assertions of great damages.

Delisting Concerns and Allegations

The dispute arose after Coinbase disclosed in November that it would remove wBTC from its listing by December 19th. The exchange pointed to alterations in the custodianship of wBTC and the growing role played by Sun as the major reasons. BitGo, a previous wBTC custodian, handed over part of the operational control to BiT Global and this raised concerns about the protocol vulnerability.

We regularly monitor the assets on our exchange to ensure they meet our listing standards. Based on our most recent review, Coinbase will suspend trading for wBTC (wBTC) on December 19, 2024, on or around 12pm ET.

— Coinbase Assets 🛡️ (@CoinbaseAssets) November 19, 2024

BiT Global has alleged that Coinbase is trying to control the tokenized Bitcoin market and promote its own product, cbBTC. Coinbase introduced cbBTC in the first half of the year and BiT Global considers that this weakens the competition.

The lawsuit stated that the delisting created doubts on the regulatory status and safety of the wBTC. It also complains that Coinbase did not give technical justification for the delisting and accuses the company of strategic and anti-competitive behavior.

Court Filing Highlights and Next Steps

Coinbase’s legal filing emphasized that its decision followed a rigorous review process. The exchange cited court precedents supporting businesses’ rights to set their own standards. It dismissed BiT Global’s claims as speculative and urged the court to deny the temporary restraining order. The filing also addressed BiT Global’s delayed legal response, which came nearly a month after the delisting announcement. Coinbase argued this delay undermines claims of urgent harm.

Despite criticism, Coinbase stands by its decision, describing it as a necessary measure to protect users and maintain platform integrity. It denied allegations of financial misconduct or monopolistic intentions, framing the delisting as a lawful business judgment.