BTC
The crypto community is criticizing Coinbase’s reasoning for delisting Wrapped Bitcoin (WBTC) after the exchange linked the decision to “unacceptable risks” associated with Tron founder Justin Sun.
On December 17, it filed a response to a lawsuit filed by BiT Global, a subsidiary of Sun. The lawsuit accused the exchange of harming Bitcoin (WBTC) by removing the token from its platform in November.
In its filing, Coinbase cited concerns about Sun, citing allegations of financial misconduct and ongoing regulatory investigations as reasons for the delisting. According to the exchange, Sun’s involvement in the WBTC project poses significant risks that could threaten the integrity of its platform.
However, this interpretation has drawn sharp criticism within the cryptocurrency community, with many questioning the sufficiency of Coinbase's legal and technical justification for the move.
Bit Global: Delisting WBTC ‘Ill-advised’
In a lawsuit filed on December 13, BiT Global says the delisting was illegal and would cause irreparable harm to the WBTC economy. The lawsuit also criticizes Coinbase for listing other tokens, including memecoins, which BiT Global claims are less risky than WBTC.
Furthermore, BiT says that COIN’s launch of its own Bitcoin token product, cbBTC, violates antitrust laws and could lead to a monopoly in the Bitcoin token market, potentially stifling competition.
The exchange’s filing justified the delisting by pointing to Sun’s alleged past misdeeds, including allegations of fraud and market manipulation. It expressed doubts about BiT Global’s credibility and highlighted the company’s ties to Sun.
The exchange confirmed that its internal process led to the decision to delist WBTC, based on concerns that continued association with Sun could jeopardize the security of its platform and customer trust.
However, BiT Global’s legal request to reverse the delisting claims that Coinbase’s decision was arbitrary and baseless, suggesting that the delisting would harm the token’s liquidity and market value.
This caused a stir in the cryptocurrency community.
Bitcoin enthusiasts and critics of the exchange, such as prominent figure Pledditor, have criticized the exchange’s actions, accusing it of relying on flimsy justifications to remove WBTC.
In a post on X, Pledditor described Coinbase’s decision as “guilt by association,” arguing that the exchange’s hostility toward Sun overshadowed any solid legal or technical basis for the move.
So, in today's lawsuit, @Coinbase is claiming they deleted wBTC, and they basically don't like Justin Sun.
This is really just that.
They don't provide any technical or legal arguments as to why wBTC can't be listed. It's just guilt by association pic.twitter.com/bJmMnAue7x — Pledditor (@Pledditor) December 17, 2024
The cryptocurrency exchange’s justification also faces scrutiny due to its own legal challenges. Sun, who has been the target of multiple regulatory investigations, is facing charges from the U.S. Securities and Exchange Commission (SEC) for alleged violations, including fraud.
Adding to the discussion, VanEck counsel Gabor Gorbak highlighted the irony of COIN’s position against Sun, noting that the exchange itself is embroiled in a major legal battle. Gorbak noted that Coinbase, which is under investigation by the SEC for allegedly offering unregistered securities, is hypocritical for focusing on Sun’s alleged misconduct while facing its own regulatory challenges.
It's ironic that @coinbase is treating @justinsuntron this way. Coinbase itself is under SEC investigation and many others, probably much more than Justin and his companies. Shaming someone's reputation like this could lead to skeletons being pulled out of their closet. https://t.co/LsJx7iOhJR — Gabor Gurbacs (@gaborgurbacs) December 17, 2024
Meanwhile, the cryptocurrency exchange is also facing charges from the Securities and Exchange Commission, including one filed in June 2023, accusing the exchange of offering unregistered securities through several tokens listed on its platform.
Coinbase's chief legal officer, Paul Grewal, has publicly called for a more positive approach from regulators toward the cryptocurrency industry.
In addition to the SEC investigation, Coinbase also settled with the New York Department of Financial Services in January 2023 for $100 million, to address concerns about its compliance program.
