Coinbase, the largest cryptocurrency exchange in the United States, announced in November that it would delist wBTC on December 19. This move prompted BiT Global, a global custodian platform that holds partial custody control over wBTC, to officially sue Coinbase in California on the 13th.
BiT Global accused Coinbase of violating antitrust laws, favoring its own competitor cbBTC, and that the delisting decision undermined consumer confidence in wBTC and caused economic losses, seeking $1 billion in damages and requesting the court to issue an injunction against Coinbase to prevent such actions.
Although Coinbase's reason for delisting was "not meeting listing standards," without further explanation, it is widely believed that the trigger may be related to the deep cooperation announced in August between BitGo, the sole custodian of wBTC for years, and Justin Sun, the founder of TRON.
At that time, BitGo announced the establishment of a joint venture with BiT Global, headquartered in Hong Kong, and planned to migrate the Bitcoin collateral of wBTC to the multi-signature wallet of this joint venture, with BitGo, BiT Global, and BiT Global's Singapore subsidiary each holding a portion of the multi-signature wallet keys. It is speculated that Justin Sun may have significant influence or control over the joint venture that custodies wBTC.
This move once triggered a crisis of trust in the DeFi community, with MakerDAO and Aave communities considering canceling the plan to stop using wBTC as loan collateral, but ultimately suspending the relevant plans.
Further reading: BA Labs recommends indefinitely suspending the delisting of WBTC, the Sky divestiture saga sees a reversal
Coinbase confirms that the decision to delist wBTC is related to Justin Sun
According to a report by Coindesk, Coinbase confirmed in its legal response to the BiT Global lawsuit yesterday (17th) that its decision to delist wBTC is related to Justin Sun.
Like many other companies in the industry, Coinbase has serious doubts about BiT Global's ability to be a reliable custodian due to Mr. Sun's involvement.
Coinbase's document stated that after BitGo announced its partnership with Justin Sun, Coinbase immediately initiated a review of wBTC and asked BiT about its ownership and Justin Sun's involvement, but the company "refused" to answer these questions.
At the conclusion of the due diligence, Coinbase concluded that Mr. Sun's affiliation with wBTC and his potential control over wBTC posed unacceptable risks to the integrity of Coinbase's customers and exchange.
Coinbase also counterattacked, saying that there is no legal support for BiT's claims, and of course no legal obligation for Coinbase to custody an asset on its exchange that is now associated with an individual who has long been accused of fraud and market manipulation in the United States. The statement directly refers to the lawsuit against Justin Sun by the SEC.
The relationship between Justin Sun and BiT Global remains unclear, and BiT Global's lawyers and TRON representatives have not yet responded to media requests for comment.
Justin Sun and Coinbase's General Counsel engage in a war of words
Notably, after BiT Global filed the lawsuit last week, Justin Sun questioned Coinbase's listing standards on the X platform on Saturday, pointing out that Coinbase's CEO had publicly stated in the community that the exchange's goal was to "list all assets legally." However, Coinbase's General Counsel, Paul Grewal, retorted:
You seem to easily overlook that our standards require safety and legality. I look forward to your testimony under oath in California. No need to bring bananas.
Justin Sun further responded:
I'm glad to understand what "safety and legality" really means in the wBTC case.
By the way: I'm not directly involved in this case, just a bit curious.