A legal battle has erupted between cryptocurrency exchange Coinbase and BitGo, the company behind Wrapped Bitcoin (WBTC), following Coinbase’s decision to delist WBTC. BitGo, along with Justin Sun, who recently joined WBTC’s management, filed a lawsuit alleging that Coinbase acted in bad faith by delisting WBTC after launching its own wrapped Bitcoin alternative, cbBTC.
The lawsuit contends that Coinbase’s delisting decision was a retaliatory move, motivated by the launch of cbBTC. However, Coinbase has vehemently denied these claims, asserting that the delisting was solely based on a “rigorous internal process” that identified “unacceptable risk” associated with Justin Sun’s involvement in WBTC.
In a strongly worded response, Coinbase argues that requiring them to continue hosting WBTC would compromise the integrity of their platform and endanger customers. The exchange points to Sun’s controversial history, citing numerous accusations, investigations, and lawsuits related to financial misconduct. Coinbase emphasizes the importance of trust and reliability in managing the Bitcoin reserves backing WBTC, questioning BitGo’s ability to maintain these standards given Sun’s involvement.
Coinbase’s response also highlights the minimal impact of the delisting on WBTC trading volume, noting that less than 1% of WBTC transactions occur on their platform. They further criticize BitGo for the delay in filing the lawsuit, arguing that the timing belies any claim of urgent or irreparable harm.
The exchange defends its right to enforce listing standards designed to protect customers from fraud and manipulative actors. Coinbase draws parallels to other technology platforms, asserting the public interest in allowing companies to exercise their judgment in safeguarding their platforms and users. They argue that BitGo’s claims of lost business and reputational damage are speculative and primarily stem from the crypto community’s pre-existing concerns about Sun, not Coinbase’s actions.
Coinbase’s delisting of WBTC followed a standard review process triggered by the announcement of Sun’s involvement. The exchange claims they attempted to ascertain the ultimate ownership and control of BitGo but received no response. This lack of transparency, coupled with Sun’s history, led Coinbase to conclude that the risks associated with WBTC were too high.
