Coinbase is facing legal challenges from BiT Global over its planned delisting of wrapped Bitcoin (WBTC). The exchange has pushed back against BiT Global’s attempt to halt the delisting, arguing that the lawsuit lacks merit and the request for a temporary restraining order should be denied.
According to court filings, Coinbase decided to delist WBTC due to concerns about risks associated with TRON founder Justin Sun and the lack of transparency about the token’s reserves. Coinbase’s chief legal officer, Paul Grewal, described the lawsuit as “bogus” and stated that it lacks any semblance of merit.
In a court filing submitted to the US District Court for the Northern District of California, Coinbase detailed its internal review process that led to the delisting decision. The exchange cited Sun’s history of alleged fraud and market manipulation, as well as BiT’s failure to provide transparency on its ownership structure, as reasons for the delisting.
Coinbase claimed that Sun’s involvement posed an unacceptable risk to its platform and customers. The exchange also stated that BiT failed to address its questions about the ultimate ownership of WBTC reserves, exacerbating its concerns.
BiT Global has accused Coinbase of unfairly delisting WBTC to promote its own competing asset, cbBTC. The firm argued that the decision would cause reputational and financial harm and erode consumer trust in WBTC. BiT claimed that the delisting would limit access to a critical trading platform and violate California’s Unfair Competition Law.
However, Coinbase dismissed BiT’s claims of irreparable harm, stating that less than 1% of global WBTC transactions occur on its platform. The exchange pointed to declining WBTC circulation before the delisting announcement, attributing it to Sun’s involvement.
Coinbase also argued that wBTC holders have multiple avenues to trade the token on other platforms and can store or transfer their holdings using Coinbase Wallet, a separate decentralized application.
The case highlights the increasing scrutiny over Sun’s influence in the crypto space, as he has faced lawsuits from the SEC and is reportedly under investigation for potential criminal misconduct. A hearing on BiT’s TRO request is scheduled for Dec. 18, which, if granted, would temporarily delay Coinbase’s delisting of WBTC on Dec. 19.