Cryptocurrency exchange Coinbase recently delisted Wrapped Bitcoin (WBTC), one of the versions of Bitcoin bridged to the Ethereum network.
Justin Sun, who had recently joined the WBTC management along with BitGo, the company behind WBTC, filed a lawsuit against Coinbase and argued that WBTC was maliciously delisted after Coinbase launched its own equivalent altcoin, cbBTC.
It was thought that after Justin Sun, a controversial cryptocurrency figure, joined the WBTC board, the token became risky, which is why Coinbase made the decision to delist.
Coinbase defended its position by citing Sun’s alleged history of bad behavior and the need to protect its users.
Coinbase outlined its reasoning for delisting WBTC in an official response:
“Continuing to list WBTC could compromise the integrity of Coinbase’s platform and put customers at risk.”
The company has pointed to reports of alleged financial irregularities by Sun, including ongoing investigations by U.S. authorities such as the FBI and the U.S. Attorney's Office. Sun also faces a fraud and market manipulation lawsuit filed by the SEC.
Following BitGo’s August 2024 announcement that Justin Sun would join WBTC’s management, Coinbase launched a standard due diligence process. Coinbase alleged that BiT specifically refused to answer questions about its ownership structure to conceal Sun’s role. Based on these findings, Coinbase concluded that WBTC posed an unacceptable risk and announced its delisting on November 19, 2024.
BiT claims that Coinbase’s move to delist WBTC is unfair, especially since Coinbase has launched its own cbBTC token. BiT claims that this constitutes anti-competitive behavior and has requested an urgent court order to block the delisting.
But Coinbase countered that BiT’s legal arguments were “frivolous” and that there was no urgency to sue. “BiT pursued its claims for approximately a month prior to filing suit,” Coinbase said, suggesting that no real harm would come from the delisting decision.
Coinbase also disputed the reputational damage and financial loss claims, arguing that WBTC’s issues were due to its relationship with Justin Sun rather than Coinbase’s decision.
*This is not investment advice.