BiT Global Sues Coinbase Over Wrapped Bitcoin Delisting Drama

Coinbase is being sued by BiT Global for spending wrapped Bitcoin (wBTC). The crypto firm alleges that Coinbase’s anti-competitive action could harm its business and that it violated state and federal laws.

Coinbase’s Decision to Delist wBTC

On November 19, 2024, Coinbase announced it would delist wBTC by December 19th. The exchange explained that the decision was taken owing to periodic reviews of its listing standards.

This comes less than a week after BitGo announced a strategic partnership with BiT Global to oversee wBTC’s custody.

wBTC’s primary custodian, BitGo, also revealed that asset custody would be spread across three entities.

But BitGo, Bit Global Trust, and a subsidiary in Singapore each hold one of the multisig keys.

That did not stop wBTC, and its status remained unaltered despite concerns from major DeFi platforms such as MakerDAO and Aave.

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Now that BiT Global is linked to Justin Sun, it has become a key part of wBTC’s future. In the new partnership, however, a Hong Kong-based trust company took up a portion of its custody role.

Crypto community skeptics were concerned about the shift towards control of this asset; however, wBTC’s market cap continued to rise.

BiT Global Alleges Coinbase Undermines Market Integrity

According to the lawsuit filed by Kneupper & Covey, representing BiT Global, Coinbase’s decision harmed the market.

In its argument, the firm said that Coinbase had violated antitrust laws. BiT Global claims the delisting will harm its business and establish a harmful precedent.

The lawsuit claims Coinbase sought to delist wBTC soon after Coinbase had launched a competing product, cbBTC.

According to BiT Global, this action undermines the cryptocurrency space’s integrity, since they already have more Bitcoin than the US has money.

Moreover, it argues that Coinbase has not uniformly applied its listing standards because it places memecoins on its platform.

Coinbase’s market influence makes its behavior especially concerning, the lawsuit says. According to Coinbase, its new product cbBTC automatically enjoys a competitive advantage by delisting wBTC.

According to BiT Global, this move unfairly impacts as it disproportionally affects BiT Global’s ability to compete in the market.

Coinbase Defends wBTC Delisting Amid Legal Battle

To maintain the integrity of the platform, Coinbase has defended its decision to review listed assets regularly.

Any asset that doesn’t meet its standards will be delisted. A Coinbase representative said this decision was made after thoroughly evaluating whether wBTC met those standards.

The exchange said its review process involves checking whether an asset is legitimate and has a market value.

Still, Coinbase says its actions are consistent with its internal policies. Only assets that meet its high standards remain listed on the exchange.

In September 2024, Coinbase launched cbBTC on top of Ethereum and on the Layer 2 network, Base.

This new asset quickly took off and now has a market capitalization of over $2 billion. Then, there was the controversy around wBTC getting delisted, and then there was the introduction of cbBTC.

However, wBTC’s value and market capitalization keeps growing despite the legal battle. wBTC’s market cap was $8 billion when the new custody agreement was announced in August.

Since then, it has soared to over $13.4 billion and is now the biggest tokenized representation of Bitcoin.

According to The Block, BiT Global’s involvement in wBTC signals the firm’s increasing place in the global cryptocurrency ecosystem.

Because of its link to Justin Sun, a famous crypto figure, both support and criticism have been directed at the company.

Yet, wBTC is still the largest in the tokenized Bitcoin space due to legal problems related to its management.