Coinbase Responds to BiT Global Lawsuit

Coinbase has filed a response to a lawsuit from BiT Global, affiliated with Justin Sun, seeking an injunction to keep 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."

The lawsuit comes as wBTC transitions to partial maintenance by BiT Global and its Singapore-based subsidiary, instead of solely by BitGo, its original custodian. In August, BitGo revealed it was sharing two of the three wBTC keys to enhance the protocol's resilience.

Concerns have arisen in the crypto community regarding Justin Sun’s involvement in the protocol, considering his history with regulatory issues including fraud and market manipulation investigations.

Coinbase announced in November it would delist wBTC on December 19 due to regulatory concerns, prompting BiT Global to sue, claiming Coinbase's decision was anti-competitive.

BiT Global specifically accused Coinbase of engaging in predatory practices to favor its rival tokenized bitcoin product, cbBTC, by spreading defamatory statements and creating “fear, uncertainty and doubt” about wBTC’s stability.

Currently, wBTC boasts a market capitalization over $13.4 billion, facilitating BTC liquidity on dapp-friendly blockchains like Ethereum, while cbBTC's market cap stands around $2 billion.

BitGo will manage wBTC operations, with the two BiT Global entities serving as custodians of the wBTC collateral.

'Unacceptable Risk'

Coinbase contended that its decision to delist wBTC was based on thorough internal processes due to the unacceptable risk of Justin Sun gaining control over wBTC, especially amid allegations of financial misconduct.

They underscored that Sun had been sued by the U.S. Securities and Exchange Commission for fraud and market manipulation and faces FBI and U.S. Attorney’s Office investigations for possible criminal activities. Coinbase previously closed accounts connected to Sun for violating its terms of service.

BiT Global's lawsuit claims Coinbase breached multiple federal and state laws prohibiting monopolistic practices and asserted that Coinbase engaged in “trade libel” by removing wBTC while listing low-market-value memecoins like MOG, PEPE, and WIF.

Coinbase stated its platform handled less than 1% of all wBTC transactions, arguing this downplayed BiT Global’s claims for damages.