Coinbase has responded to a lawsuit by BiT Global, a company affiliated with Justin Sun, that sought to prevent the delisting of wrapped Bitcoin (wBTC) from its platform. The legal tussle, centered on the largest tokenized bitcoin product, highlights tensions between Coinbase and BiT Global amid concerns about governance and regulatory risks associated with wBTC.
In a post on X, Coinbase’s Chief Legal Officer, Paul Grewal, dismissed the lawsuit as “baseless,” urging the court to deny BiT Global’s request for a temporary restraining order. “We’ve outlined why their claims lack merit and why their injunction should not be granted,” he stated.
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
Coinbase announced in November that wBTC would be delisted on December 19, citing governance changes and Justin Sun’s involvement. In August, BitGo, the original custodian of wBTC, revealed that two of the three keys to the protocol were transferred to BiT Global and its Singaporean subsidiary, raising concerns about decentralization and oversight. Critics have flagged Sun’s history of regulatory scrutiny, including fraud allegations from the U.S. Securities and Exchange Commission (SEC).
BiT Global responded with legal action, accusing Coinbase of anti-competitive behavior. The lawsuit alleges that Coinbase sought to promote its own tokenized bitcoin product, cbBTC, by spreading “fear, uncertainty, and doubt” about wBTC. Additionally, BiT Global claimed Coinbase violated antitrust laws under the Sherman Act and defamed wBTC while continuing to list memecoins like PEPE and MOG.
wBTC, with a market capitalization of over $13.4 billion, plays a critical role in enabling Bitcoin liquidity on Ethereum and other blockchains. In contrast, Coinbase’s cbBTC has a significantly smaller market cap of $2 billion. BiT Global contends that Coinbase’s delisting decision damages market competition and investor confidence.
Coinbase defended its actions, stating that its internal review deemed wBTC an “unacceptable risk” due to Justin Sun’s involvement. It highlighted previous instances where Sun-linked entities violated its terms of service, adding that Sun is reportedly under investigation by multiple U.S. agencies.
Also Read: Coinbase Faces $1B Lawsuit Over Alleged Monopoly in Wrapped Bitcoin Market
The exchange also downplayed the lawsuit’s financial implications, pointing out that Coinbase accounts for less than 1% of wBTC transactions globally. As the case unfolds, the outcome could set significant precedents for how exchanges handle governance disputes and regulatory risks in the evolving cryptocurrency landscape.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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