Coinbase’s Response to BiT Global’s Lawsuit

Coinbase has filed a response to a lawsuit from Justin Sun-affiliated BiT Global seeking an emergency injunction to retain wBTC, the largest tokenized Bitcoin product, on the exchange.

> “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,” said Coinbase Chief Legal Officer Paul Grewal on X. “We lay out why this lawsuit lacks any semblance of merit and why their request for a temporary restraining order should be denied.”

This lawsuit arises during a transition for wBTC, which is now partially maintained by BiT Global rather than solely by its original custodian, BitGo, as of August. BitGo shared two-thirds of the wBTC keys with BiT Global to enhance protocol resilience.

Concerns about TRON founder Justin Sun’s involvement in the protocol have been raised by various industry players due to his previous regulatory scrutiny and allegations of fraud and market manipulation.

In November, Coinbase announced the delisting of wBTC on December 19, citing these concerns from a periodic review of its “listing standards.” BiT Global countered with a lawsuit, claiming anti-competitive practices.

BiT Global alleged that Coinbase engaged in predatory practices favoring a rival tokenized Bitcoin product, cbBTC, by disseminating defamatory statements that raised doubts about wBTC’s regulatory status and stability.

As of now, WBTC boasts a market capitalization of over $13.4 billion, allowing users to transfer BTC liquidity onto dapp-friendly blockchains like Ethereum. In contrast, cbBTC’s market cap is around $2 billion.

‘Unacceptable Risk’

Coinbase stated that it decided to delist wBTC after a rigorous internal process due to the risk that control could fall under Justin Sun, citing allegations of financial misconduct.

Coinbase highlighted that Sun has faced legal actions from the U.S. SEC for fraud and market manipulation and is reportedly under investigation by the FBI and the U.S. Attorney’s Office for the Southern District of New York for potential criminal activities. The exchange had previously closed accounts linked to Sun for violating its terms of service.

“BiT seeks to force Coinbase to do business with an entity that no longer complies with Coinbase’s standards due to Mr. Sun’s material involvement,” Coinbase remarked. “Mr. Sun’s connection to wBTC is notably absent from BiT’s Complaint and TRO request.”

BiT Global contended that Coinbase violated several federal and state laws, including the Sherman Act and Lanham Act, aimed at preventing unfair monopolies and promoting competition while trying to dominate the wrapped Bitcoin market. They also accused Coinbase of “trade libel” by removing wBTC, while still listing memecoins like MOG, PEPE, and WIF.

In its filing, Coinbase noted that it accounted for less than 1% of wBTC transactions, arguing this minimized BiT Global’s damages claims.