Coinbase Refutes BiT Global’s $1 Billion wBTC Lawsuit, Calls Claims ‘Baseless’

Coinbase has dismissed allegations brought by BiT Global, asserting that no legal obligation requires the exchange to “compromise the integrity of its platform” by conducting business with the Justin Sun-linked entity. The U.S. crypto exchange filed a court motion urging the Northern California court to reject BiT Global’s $1 billion lawsuit and its request for a temporary restraining order (TRO) concerning the delisting of wrapped Bitcoin (wBTC).

The Lawsuit and Allegations

BiT Global filed its lawsuit against Coinbase on December 13, claiming that the planned removal of wBTC from Coinbase’s platform was unjustified and would harm the token’s economics. The lawsuit argued that delisting wBTC was illegal and criticized Coinbase for continuing to support less significant assets like meme coins. BiT Global also alleged that Coinbase’s launch of its proprietary token, cbBTC, violated antitrust laws and could establish a Coinbase-controlled monopoly in the tokenized Bitcoin market.

Coinbase’s Defense

In its December 17 court filing, Coinbase countered BiT Global’s claims, stating that the accusations under California’s Unfair Competition Law were irrelevant. The exchange highlighted that cbBTC, a newly introduced asset, currently ranks outside the top 10 tokenized Bitcoin assets by market capitalization, as verified by DeFiLlama.

Coinbase further explained that its decision to delist wBTC stemmed from material changes in the asset’s stewardship, particularly Justin Sun’s control over its Bitcoin reserves. Sun, the founder of Tron (TRX), has been under scrutiny for alleged federal violations. The Securities and Exchange Commission (SEC) has already charged Sun and three of his companies, while the FBI is reportedly investigating him for potential involvement in terror financing. Despite these investigations, no formal indictment or arrest warrant has been issued against Sun as of now.

Rationale Behind wBTC Delisting

Coinbase’s new risk assessments for wBTC flagged significant concerns due to Sun’s involvement. The exchange described its decision to delist the token as a “common sense” measure to safeguard its platform and users. Coinbase emphasized that the delisting would have minimal impact on wBTC’s overall on-chain activity, as most of its transactions occur on other platforms.

Seeking Court Denial

Coinbase has asked the court to reject BiT Global’s request for a TRO and its $1 billion relief demand. The exchange argued that BiT Global’s claims of an “emergency” surrounding wBTC were fabricated and cited the firm’s ties to an individual facing multiple allegations as further grounds for dismissal.

By taking this stance, Coinbase is reinforcing its commitment to maintaining high standards of compliance and security on its platform while navigating the complexities of regulatory scrutiny and market dynamics.