Coinbase pushed back against BiT Global’s legal attempt to halt its planned delisting of wrapped Bitcoin (WBTC), arguing that the lawsuit lacks merit and the firm’s request for a temporary restraining order (TRO) should be denied.
According to court filings, Coinbase decided to delist WBTC due to concerns about risks stemming from its association with TRON founder Justin Sun and the lack of clarity about the token’s reserves.
Coinbase chief legal officer Paul Grewal said the filing is a response to BiT’s “bogus” lawsuit. He also added:
“We lay out why this lawsuit lacks any semblance of merit and why their request for a TRO should be denied.”
Sun: What are the concerns?
Coinbase’s internal review, which lasted for months and led to its delisting decisions, was detailed in a filing to the US District Court for Northern District of California.
The exchange cited Sun’s widely publicized history of alleged fraud and market manipulation, combined with BiT’s failure to provide transparency on its ownership structure, as presenting an “unacceptable risk” to Coinbase’s platform and its users.
Coinbase cited Sun’s allegedly “long history of alleged fraud and market manipulation”As posing a question “unacceptable risk”To its platform and to customers. The company added that BiT failed to address Coinbase’s questions about the ultimate ownership of WBTC reserves, exacerbating its concerns.
The filing states:
“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[] involve[meant].’”
Exchange further stated that their decision is in accordance with the responsibility they have to maintain platform integrity as well as customer confidence. They cited previous instances when assets were removed from listings for similar reasons.
Delisting damages
BiT Global has claimed that Coinbase unfairly removed wBTC from its list in order to promote cbBTC, their own rival asset. It also claims the move will result in significant financial and reputational damage.
BiT claimed that delisting WBTC could undermine consumer confidence and restrict access to an important trading platform. It further described Coinbase’s delisting as a “signal to the digital asset community that WBTC is less trustworthy than other tokens,” a move it contends violates California’s Unfair Competition Law.
However, Coinbase countered that less than 1% of global WBTC transactions occur on its platform, dismissing BiT’s claims of irreparable harm. It also pointed to declining WBTC circulation before its delisting announcement, which it attributed to Sun’s involvement.
Coinbase also dismissed BiT’s assertions that the delisting would harm the broader public interest. Coinbase argued wBTC owners still have many options for trading the token on different platforms. They can also use Coinbase Wallet to store and transfer their holdings.
The case highlights mounting scrutiny over Sun’s influence in the crypto space. Sun was sued by the Securities and Exchange Commission and reportedly is being investigated for possible criminal conduct.
A hearing on BiT’s TRO request is scheduled for Dec. 18. If granted, it would temporarily delay Coinbase’s delisting of wBTC, currently set for Dec. 19.
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