Wrapped Bitcoin Drops to $5,200 on Binance Amid Coinbase Delisting Plans and Custody Disputes
On Nov. 23, 2024, Wrapped Bitcoin (WBTC) experienced a sharp flash crash on the Binance exchange, with its price briefly dropping to $5,200. The crash was attributed to an electronic trading error and was limited to Binance, leaving prices on other exchanges unaffected. WBTC quickly recovered, returning to its standard price of around $97,000 by the end of the day.
The flash crash coincided with ongoing scrutiny of WBTC following Coinbase’s decision to delist the asset. On Nov. 19, Coinbase announced plans to suspend trading of WBTC starting Dec. 19, 2024. The exchange stated that the decision was based on maintaining listing standards, emphasizing that user holdings would remain withdrawable.
BiT Global, the custodian for WBTC, has criticized the delisting as a strategic move by Coinbase to favor its own wrapped Bitcoin product, cbBTC. Launched in Sept. 2024, cbBTC has faced accusations of gaining an unfair advantage. “It’s clear that Coinbase’s decision is an attempt to gain a competitive advantage, pushing forward their own wrapped Bitcoin product, cbBTC, and removing the largest and most influential competitor in WBTC,” a BiT Global representative said.
The controversy surrounding WBTC escalated earlier this year after it transitioned to a multi-jurisdictional custody structure. Custodial responsibilities are now shared across the U.S., Hong Kong, and Singapore. Tron founder Justin Sun’s involvement in the custody arrangement has drawn backlash from parts of the crypto community.
These custody changes led to the Sky community, formerly Maker, voting to remove WBTC as trading collateral. Critics within Sky pointed to governance risks tied to the custodial structure and expressed concerns about transparency.
Despite these issues, WBTC remains an important tool for bridging Bitcoin with decentralized finance (DeFi). Introduced in 2019, WBTC has provided Bitcoin holders with access to DeFi applications while maintaining a one-to-one peg with Bitcoin’s price.
The flash crash on Binance, while resolved quickly, adds to growing uncertainty around WBTC’s future. Coinbase’s delisting announcement and the shift in custodial practices have amplified debates about trust and competition within the tokenized Bitcoin market. With trading normalized on Binance, attention now turns to the Dec. 19 delisting date and its potential market impact.
