One of the largest cryptocurrency exchanges, Bitcoin exchange Coinbase, was sued by Hong Kong-based BiT Global Digital Limited (BiT). BiT failed to have Bitcoin wrapped (wBTC) listed on the exchange. The U.S. District Court sided with Coinbase on the point that it was right to protect against too much risk on the exchange’s platform.
BuzzFeed News was informed that wBTC was attached to Tron founder Justin Sun’s BiT, which sought emergency legal aid to prevent its delisting. The company also said if the shift were allowed, it would damage its business and the wider crypto ecosystem.
But the court threw out BiT’s claim, finding it hadn’t made its bid for emergency relief when it should. The ruling rejected that irreparable harm could occur, saying that any such losses would be repaid with damages.
Coinbase Cites Justin Sun’s History For wBTC Delisting
BiT was involved in wBTC, and now he is working on it with BitGo for the wBTC chain and a watch over wBTC. That was the heart of Coinbase’s argument. Despite this being the obvious next step, Coinbase cites Sun’s history of fraud, market manipulation, and founder’s alleged criminal status as the reason for delisting Sun.
According to Coinbase, the internal review process seeks to validate assets for legal compliance, technical integrity, security, and risk in general. While the connections to BiT were red flags for the exchange about the wBTC custodianship and reliability.
It also questioned BiT’s complete lack of transparency on the joint venture’s ownership structure and Sun’s role in it. However, Coinbase said it was responsible for protecting users and maintaining platform integrity.
The Court verified that Coinbase has a right to decide which assets to list and which to delist, as Coinbase’s stance was supported. Jostled by critics of the coin, Coinbase proceeded to ‘do so on its blockchain as a sop to them’ but noted that wBTC comprised ‘only [less than] 1 percent of Coinbase’s trading volume.’
Capitol Hill Delisting: Coinbase minimized the public harm it could impose. The Court also rejected Bit’s claims under UCL, as Coinbase has bound the platform to business the assets linked to doubtful folks.
Justin Sun’s reputation was central to the case. Coinbase had enough of his legal troubles and financial misconduct accusations, Coinbase said in a statement.
The Court ruled its decision for Coinbase’s framing. It sided with Coinbase’s argument that BiT’s alleged harm to reputation shouldn’t lie in Coinbase’s decision but in Bitcoin’s reputation, including related to Sun. However, critics have argued that Coinbase has a motive: Leading up to Second Coincidence, Coinbase debuted its version of Bitcoin tokenized into cbBTC.
While wBTC has traditionally been seen as a trusted wrapped asset-backed 1:first launched, cbBTC has rapidly taken market position and is now 1 with Bitcoin.
It is difficult to get people to trust and secure cryptocurrency, but Coinbase’s victory in the lawsuit is a good sign. The Court ruling also appreciated the reality of crypto ecosystems and practical transparency about who legitimately controls what and what the dynamics should be. Given the ever-changing industry, exchanges like Coinbase must constantly balance innovation, solid risk management, and user protection.
