Coinbase, the largest cryptocurrency exchange in the United States, has filed a legal response to a lawsuit brought by BiT Global, a company linked to Justin Sun.
The lawsuit aims to block Coinbase from delisting wrapped Bitcoin (wBTC), the platform’s first and largest tokenized Bitcoin product. Coinbase’s Chief Legal Officer, Paul Grewal, announced the development on social media, stating that the company believes the claims lack merit and that BiT Global’s request for a temporary restraining order (TRO) should be rejected.
The dispute arose during a transitional period for wBTC, as responsibilities for the product were moved from BitGo to BiT Global and its Singapore-based affiliate. BitGo disclosed plans to improve the wBTC protocol in August by distributing two of its three management keys to the BiT Global entities.
BiT Global alleges favoritism toward rival token
In its legal complaint, BiT Global accused Coinbase of promoting its own tokenized Bitcoin product, cbBTC, while using defamatory tactics to cast doubt on the regulatory compliance and stability of wBTC. The firm alleged that Coinbase’s decision to delist wBTC was not based on legitimate user concerns but rather on an attempt to suppress competition.
Coinbase, however, has countered these claims by citing broader industry concerns about BiT Global’s operations and its links to Justin Sun, who has faced allegations of market manipulation and regulatory violations in the past. Coinbase argued that these issues raised legitimate questions about BiT Global’s suitability to manage wBTC.
Legal implications and federal law allegations
BiT Global has accused Coinbase of violating multiple federal and state laws in its efforts to remove wBTC from its platform. Among the cited violations are breaches of the Sherman Act, which governs monopolistic practices, and the Lanham Act, which addresses false advertising and unfair competition. BiT Global claims that Coinbase’s actions are anti-competitive and amount to an abuse of market power.
Coinbase, on the other hand, has maintained that its actions align with compliance standards and user safety. The exchange stated that it should not be forced to continue business with entities it deems non-compliant or risky due to Justin Sun’s involvement.
wBTC management transition adds complexity
The legal dispute has added tension to the ongoing transition of wBTC management. Under the new arrangement, BitGo retains operational oversight, while BiT Global and its Singapore affiliate hold collateral for the token. Coinbase’s decision to delist wBTC has sparked debate among market participants, who closely monitor the situation to gauge its potential impact on the broader cryptocurrency ecosystem. The case unfolds as both parties await a court decision on BiT Global’s request for a TRO.
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