Coinbase has responded to the lawsuit filed by BiT Global, an entity related to Justin Sun, last week, alleging that the exchange "defamed" BiT Global and attempted to monopolize the market for tokenized Bitcoin (wBTC) by delisting wBTC.
Coinbase has filed a response to BiT Global's emergency request to keep wBTC, the first and largest tokenized Bitcoin product, on the largest cryptocurrency exchange in the United States.
"We have filed a response to BiT Global's effort to prevent the delisting of wBTC before any discovery or formal response to their baseless allegations," Paul Grewal, Coinbase's Chief Legal Officer, shared on social media X. "We have laid out why this lawsuit is entirely without merit and why their [temporary restraining order] request should be denied."
This move comes as wBTC is undergoing a transition, now being maintained in part by BiT Global and their Singapore subsidiary, rather than solely by the original custodian, BitGo.
In August, BitGo revealed that it had shared two of the three security keys for wBTC with two BiT Global entities to enhance the protocol's resilience. However, this has raised concerns from many in the cryptocurrency community about the involvement of Justin Sun, the founder of TRON, given previous allegations of fraud and market manipulation against him.
Coinbase announced in November that it would delist wBTC on December 19th, after a periodic review of its "listing standards" and determining that the risks associated with the potential for Justin Sun to gain control of wBTC were unacceptable.
BiT Global has sued Coinbase, arguing that this delisting decision is anti-competitive. BiT Global claims that Coinbase has engaged in "unfair" competitive practices to promote a rival tokenized Bitcoin product, cbBTC, including spreading defamatory information and creating "fear, uncertainty and doubt" (FUD) about the stability and legal status of wBTC.
wBTC currently has a market capitalization of over $13.4 billion, allowing users to bring BTC liquidity onto blockchain networks that support dapps like Ethereum. In contrast, Coinbase's cbBTC token has a market capitalization of only around $2 billion.
BiT Global alleges that Coinbase has violated several federal and state laws, including the Sherman Act and the Lanham Act, to prevent monopolization and promote fair competition. BiT also accuses Coinbase of trade libel by delisting wBTC while still listing memecoins like MOG, PEPE, and WIF.
In its response, Coinbase emphasizes that its platform accounts for less than 1% of the total trading volume related to wBTC, significantly reducing BiT Global's claims for damages.
Coinbase also asserts that it decided to delist wBTC based on a "rigorous internal process," citing unacceptable risks that control of wBTC could fall into the hands of Justin Sun. Coinbase cites repeated allegations of Sun's financial misconduct, including being sued by the U.S. Securities and Exchange Commission (SEC) for fraud and market manipulation, and being reportedly under investigation by the FBI and the U.S. Attorney's Office for the Southern District of New York for "potential criminal conduct."
Coinbase argues that BiT Global is attempting to force it to work with an entity that no longer meets the exchange's standards, and alleges that BiT has "deliberately omitted" Justin Sun's name from their complaint documents.
This lawsuit highlights the conflicts between stakeholders in the cryptocurrency industry, reflecting the complex issues surrounding listings, regulations, and the control of digital assets. The controversy around wBTC also underscores the potential risks in the management of centralized cryptocurrency products.
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The article Coinbase responds to BiT Global's lawsuit over wBTC delisting first appeared on CoinMoi.
