ICYMI: Crypto custodian BiT Global took action against Coinbase last week for delisting wBTC.
Coinbase’s decision to remove wBTC from its list was first made in late November. It had launched its own bitcoin, cbBTC.
As a child, my parent was an attorney. I always heard that there were three sides to any story. The truth and the side of each party.
Coinbase’s response to BiT Global’s lawsuit was made last night. Both parties presented some interesting arguments.
Coinbase’s filing focuses primarily on Justin Sun. Justin has been connected to wBTC (formerly known as wBTC) since August. Essentially, the firm claimed that wBTC did not meet the listing requirements because of this. “unacceptable risk” Sun poses due to his “material involve[ment].”
“Consistent with that process, Coinbase conducted careful diligence, including asking BiT questions about who ultimately owned and controlled BiT. BiT refused to answer, presumably to conceal Mr. Sun’s role, much as it has done here. At the conclusion of its diligence, Coinbase concluded that Mr. Sun’s affiliation with—and potential control over—wBTC presented an unacceptable risk to its customers and the integrity of its exchange,” In its filing on Tuesday, it stated that.
BiT, on the other hand, argued that Coinbase had ulterior motives to delist wBTC, which is to throw around its weight as one of the top exchanges — forcing users to only have access to its own wrapped bitcoin offering, rather than enabling a choice between the two.
“Having achieved the network effects that were its goal, it has now embarked on an effort to use that power to replace cryptocurrencies created by others with its own knock-off versions—with Coinbase taking short term-losses to keep profits for itself longterm as its knock-off gains market share. And wBTC is Coinbase’s first target,” BiT argued last week.
BiT says that is not the case “a tale as old as Silicon Valley,” Google, Microsoft, and Facebook all have tried to eliminate the competition.
“A centralized platform gains more and more users from a first mover advantage. It creates a moat for itself using network effects which lock those users into its platform. And then it starts changing the rules that got it there. After the bait-and-switch, smaller entrepreneurs find themselves the victims of a corporate goliath that sees their innovations merely as a resource to be grabbed by any means possible and absorbed into itself,” It was said.
Coinbase however, claimed that its exchange compensates for any shortcomings. “de minimis (less than 1%) portion” Traded wBTC. According to Coinbase there is not enough proof to support a temporary injunction to force Coinbase to continue hosting wBTC.
Today, a hearing will be held in California to hear both sides of the argument.
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