- Crypto Exchange faces a $1 billion lawsuit for delisting Wrapped Bitcoin (wBTC), accusing it of market manipulation.
- BiT Global claims Coinbase’s actions harmed consumer trust and promoted its competing token, cbBTC.
- wBTC holds a market cap of $13.7 billion, while cbBTC has reached $2 billion since its launch.
Crypto exchange Coinbase is facing a lawsuit for more than $1 billion from BiT Global Digital Limited, which accuses the platform of damaging the market for Wrapped Bitcoin (wBTC) following its decision to delist the token in November.
Kneupper and Covey filed the lawsuit in the Northern District of California on December 13, BiT Global claims that Coinbase’s delisting of wBTC was a strategy to promote its competing token, cbBTC. The lawsuit argues that this move caused significant financial losses and harmed consumer trust in BTC.
We believe this decision sets a terrible precedent for everyone in the cryptocurrency space. If an exchange of Coinbase’s size can delist a cryptocurrency just as it plans to launch its own competing product, who’s safe? And who’s next?
Kevin Kneupper of Kneupper & Covey
BiT Global Lawsuit Over Coinbase wBTC Suspension
Wrapped Bitcoin allows Bitcoin to be traded on networks like Ethereum, and it has been a dominant tokenized Bitcoin product in the crypto space. Initially launched in 2019, BitGo managed WBTC’s custody until August 2020, when BiT Global became a joint custodian. The change sparked controversy due to Justin Sun’s involvement with BiT Global, leading to concerns about protocols like Aave.
In a lawsuit filed in the Northern District of California, BiT Global claims that Coinbase’s reason for suspending wBTC trading, citing listing standards, is insufficient. The complaint highlights this crypto exchange’s listing of “fundamentally valueless” memecoins like Pepe (PEPE). BiT Global is seeking over $1 billion in damages and injunctive relief against the exchange.
Coinbase announced in a November 19 post that it will suspend trading for wBTC (Wrapped Bitcoin) on December 19, 2024, around 12 p.m. ET. The decision follows a recent review of the exchange’s assets to ensure they meet listing standards. Users are advised to prepare accordingly before the suspension takes effect.
Coinbase’s Anti-Competitive Actions
BiT Global accuses Coinbase of using its market dominance to eliminate competition. The lawsuit claims that the crypto exchanhe replaced WBTC with cbBTC to monopolize the wrapped Bitcoin market and increase transaction revenues. BiT Global’s attorneys suggest that this exchange plans to introduce unwrapping fees once it has suppressed its competition, further strengthening its market control.
The complaint also highlights the inconsistency in Coinbase’s actions, pointing out that the exchange removed WBTC while allowing other low-value tokens to remain listed. BiT Global argues that this crypto exchange’s move was not about upholding quality but about capturing WBTC’s market share for itself. According to the filling:
“The decision to allow users to trade these memecoins makes clear that Coinbase did not delist WBTC because of any listing standard, but because Coinbase coveted WBTC’s market share and wanted it for itself.”
Despite the ongoing controversy, WBTC remains the leading tokenized Bitcoin asset, with a market cap of $13.7 billion. However, its supply has decreased by over 20,000 BTC since the delisting issue surfaced. In contrast, cbBTC, launched in September, has quickly gained momentum, with a market cap of around $2 billion.
BiT Global’s lawsuit seeks to restore fair competition and protect decentralized finance from further centralization. The firm demands that Coinbase stop its anti-competitive practices and reinstate WBTC, emphasizing the importance of maintaining decentralized innovation in crypto.
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