Coinbase is under fire for delisting wBTC, citing risks linked to Justin Sun without providing technical justification. Critics note the irony, as Coinbase itself faces numerous regulatory investigations. On December 17, Coinbase filed a response to a lawsuit from BiT Global, which accused the exchange of harming the wrapped Bitcoin (WBTC) market by delisting the token from its platform in November.
Coinbase Quotes ‘Unacceptable Risk’
The crypto community as it is lashing out against Coinbase’s reasoning for delisting Wrapped Bitcoin (WBTC) after the exchange linked the decision to the “unacceptable risk” associated with Tron founder Justin Sun.
Coinbase referenced concerns about Sun in its filing, citing allegations of financial misconduct and ongoing regulatory investigations as reasons for the delisting. The exchange doubted BiT Global’s credibility, highlighting the firm’s linkage to Sun.
“At the conclusion of its diligence, Coinbase concluded that Mr. Sun’s affiliation with—and potential control over—wBTC presented an unacceptable risk to its customers and the integrity of its exchange,” the filing said. The explanation sparked sharp criticism within the crypto community, with many questioning the sufficiency of Coinbase’s legal and technical justification for the move.
Bit Global Says Delisting Was Illegal
BiT Global, in its lawsuit filed on December 13, argues that the delisting was illegal and would irreparably damage WBTC’s economics. The lawsuit also criticized Coinbase for listing other tokens, including meme coins, which BiT Global claims are less relevant than WBTC.
BiT argued that COIN’s launch of its own tokenized Bitcoin product, cbBTC, breaches antitrust laws and could lead to a monopoly in the tokenized Bitcoin market, that could stifle competition.
The exchange contended that its internal process led to the decision to delist WBTC due to concerns that its connection with Sun could harm the platform’s security and customer trust.
Critics Note The Irony
Bitcoin enthusiasts and critics of the exchange, such as the notable figure Pledditor, have rebuked the exchange’s actions, accusing it of relying on a weak rationale to delist WBTC.
While Coinbase gave their reason in a court filing today as to why they delisted wBTC, Pledditor noted that “it’s basically just they don’t like Justin Sun. They don’t give any technical or legal arguments about why wBTC can’t be listed.” “It’s just guilt by association,” he added.
Critics have noted the irony as the crypto 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. SEC for alleged violations, including fraud.
Furthermore, VanEck adviser Gabor Gurbacs highlighted the irony that Coinbase is treating Justin Sun this way. “Coinbase itself is under SEC and numerous other investigations, probably many more than Justin and his businesses. Questioning someone’s reputation this way might just bring out skeletons from their own closet,” he remarked.
Coinbase is facing charges from the SEC, including a lawsuit filed in June 2023, accusing the exchange of offering unregistered securities through tokens listed on its platform. Additionally, in January 2023, Coinbase settled with the New York Department of Financial Services for $100 million over concerns about its compliance program.
