California Court Allows Coinbase to Delist Wrapped Bitcoin

Coinbase successfully fended off a restraining order sought by BiT Global, with a California court ruling in favor of the exchange’s decision to delist Wrapped Bitcoin.

Hong Kong-based firm BiT Global is allegedly linked to crypto entrepreneur and TRON founder Justin Sun, who is seeking an order restraining Coinbase from removing Wrapped Bitcoin (wBTC), arguing it would cause irreparable harm to his business. U.S. District Judge Araceli Martínez-Olguín’s ruling allows the delisting to proceed as planned.

As Crypto.news previously covered, American cryptocurrency exchange giant Coinbase announced on November 19 that it would remove wBTC from its platform on December 19. The decision came as a result of Coinbase’s regular review process, which BiT Global claimed was biased. . The firm subsequently filed a lawsuit alleging violations of competition laws and defamation, alleging that the exchange damaged wBTC’s reputation by promoting its own tokenized Bitcoin product, cbBTC.

Coinbase defended its decision as a private company. A spokesperson for the exchange denied the allegations, saying they have the right to decide whether a token should be listed or delisted. The company also denied accusations of monopolistic behavior, saying it represents less than 1 percent of all wBTC trading activity. cbBTC has been on the rise since its launch in September, with a market cap exceeding $2.11 billion.

BiT Global also claimed that the firm’s advisor Justin Sun was mistakenly involved in the scandal. Still, Coinbase noted Sun’s previous accusations of financial misconduct and argued that his move away from wBTC was a strategic decision. Coinbase’s legal counsel called the lawsuit frivolous and suggested that both BiT Global and its lawyer could be sanctioned. They noted that there was no evidence to support claims that Coinbase’s actions caused users to abandon wBTC.

BiT Global also claimed that wBTC is vital to the crypto ecosystem and defended its stance by accusing Coinbase of its neutral listing policies and accusing the exchange of listing meme coins that serve little purpose, such as Mogcoin (MOG) and pepe (PEPE).

In a court filing today, @Coinbase They explained the reason they delisted wBTC and they actually don’t like Justin Sun.

That’s really all.

They do not provide any technical or legal arguments as to why WBTC cannot be listed. It’s just guilt by association pic.twitter.com/bJmMnAue7x

— Pledditor (@Pledditor) December 17, 2024

However, many crypto enthusiasts side with BiT Global, saying that Coinbase’s decision to delist wBTC was because they “didn’t like Justin Sun.” Critics also argued that wBTC is more acceptable than cbBTC and, unlike its rival, does not provide proof of reserves. A token requires proof of reserves to prove that the issuer has sufficient assets to back the token and expand transparency and trust. For wrapped tokens like wBTC or cbBTC, it shows that each token is actually backed 1:1 by the original asset, in this case Bitcoin (BTC). On the other hand, the absence of proof of reserves puts every user at increased risk of bankruptcy, fraud or mismanagement by the issuer.