Bit Global Digital, the global controller and issuer of Wrapped BTC (WBTC), has filed a complaint against Coinbase, Inc. The lawsuit seeks damages for the delisting of WBTC from the exchange.
Bit Global Digital estimates damages of up to $1 billion after Wrapped BTC (WBTC) was delisted from Coinbase. In a filing dated 10/03/2019 in the U.S. District Court, Northern District of California, Bit Global pointed to the wide-ranging direct and potential losses resulting from the lawsuit.
Bit Global claims that Coinbase has noticed the utility of WBTC, the most widely used form of wrapped Bitcoin. In 2024, Coinbase introduced its new asset, cbBTC, which has already launched on Ethereum, Base, and Solana.
Both WBTC and the new cbBTC were trading on Coinbase, until the exchange announced its upcoming delisting on November 19. The newly filed lawsuit noted that the move stifled free competition and damaged the reputation of the longest-running token. CBBTC launched in September, immediately causing concern among all users, especially regarding DeFi lending.
The lawsuit alleges that the launch of cbBTC and subsequent delisting of WBTC could result in reputational and market losses of up to $1 billion. The filing does not explicitly seek those damages, as the exact amount of the claim will be determined at trial.
Coinbase is a relatively small market for WBTC, holding just 0.71% of total spot volumes. WBTC is most active on Binance, as well as on the decentralized pair Uniswap V3.
Spot trading uses a relatively small share of the WBTC supply, around 5.1%. Most of the WBTC is used as collateral in lending. Around 20% of the token is used for interoperability and trac contracts. Over 32% of the supply is held for safekeeping, in the form of ERC-20 tokens.
WBTC's delisting comes after controversy with the entity controlling the wrapped token
The shift to cbBTC also comes in the wake of controversy over the control of WBTC. WBTC was previously issued by BitGo, and is now controlled by Bit Global and its subsidiary. The issue with the new arrangement is the possibility of WBTC being issued on other networks, particularly TRON. There have also been concerns about Justin Sun’s control over the supply and collateral of WBTC.
WBTC is currently one of the most transparent tokens, with a public list of addresses holding collateral. There are concerns about WBTC being issued on TRON without transparent collateral, or about exploits against the actual BTC collateral. Currently, TRON is around 99 WBTC, and is in an early stage beta test.
Coinbase tokens have already expanded to 21,605 BTC, with only 652 on Solana and 4,229 on Base. The asset still has to catch up with the supply of 135,843.65 WBTC.
The controversy between the issuer and the controller has dominated WBTC burns over the past few months. The current supply of WBTC is the lowest since 2021, decreasing from over 152,000 tokens in the summer of 2024. With BTC currently trading at over $101,000, the decreasing supply could be one of the points in determining the damage done to Bit Global Digital.
In addition to Coinbase phasing out WBTC, the asset may also be abandoned by the Sky Ecosystem, formerly known as Maker DAO. The DeFi protocol still maintains two pools with WBTC collateral but has raised the issue of liquidating them as well as switching to cbBTC.
Meanwhile, other major DeFi protocols hold a significant share of the WBTC supply. Aave V3 is the single largest wallet, with flows reaching 24.92% of the total WBTC. The asset has also spread to Compound and Morpho as well as Wormhole and other bridges.
Market maker Wintermute is one of the major users of WBTC, and is involved in minting and regular burns. The use of WBTC has not harmed the reputation or activity of all DeFi, and WBTC is still essential in many trading pairs, bridges, and lending collateral pools.
The main advantage of WBTC is traceability and transparency, with proof of assets. Coinbase claims that all CBTC is backed by actual BTC, but it has not provided a publicly known wallet containing actual BTC holdings.