Justin Sun-Linked BiT Global Sues Coinbase For $1B Over WBTC Delisting

Coinbase is facing a $1 billion legal challenge from BiT Global over its decision to delist Wrapped Bitcoin (WBTC).

On Dec. 13, BiT Global filed a lawsuit demanding $1 billion in damages in response to Coinbase, the largest U.S.-based cryptocurrency exchange, announcing it would begin delisting WBTC from Dec. 19 due to the token no longer meeting its listing standards.

The lawsuit accuses Coinbase of engaging in anti-competitive behavior, noting that Coinbase launched its own Bitcoin-backed ERC-20 token, cbBTC, in September. As such, BiT Global claims that Coinbase violated the Sherman Act.

“Once the value in wBTC had been demonstrated, Coinbase changed the rules, delisting wBTC from its platform so that it could no longer be traded on the Coinbase platform—and it did so shortly after launching its own knock-off clone called cbBTC,” the lawsuit said. “Because of the reduction of wBTC’s market share and the attack on its reputation, BiT Global stands to lose more than $1 billion in its market valuation, especially if Coinbase’s conduct continues unabated.”

"Coinbase is engaging in anticompetitive conduct to push wBTC out of the US market — to make way for its own competing product," said Kneupper & Covey, BiT Global's legal representation.

Paul Grewal, the chief legal officer of Coinbase, responded to the lawsuit on X, stating that Coinbase looks forward to demonstrating to a court how its token listings are determined.

“When an asset no longer meets our listing standards, we will drop it,” Grewal said. “When another asset can meet or exceed market requirements without sacrificing those standards, we will list it. Thank you Bit Global for the chance to show this to a US federal court and on the entire global crypto stage.”

Sun replied to Grewal with a screenshot showing that Brian Armstrong, the CEO of Coinbase, stated that Coinbase's objective is to “list every asset where it is legal to do so.”

“It seems that Coinbase’s CEO doesn’t agree with your perspective,” Sun said.

Wrapped Bitcoin’s controversial restructure

On Aug. 9, Wrapped Bitcoin became the center of controversy when BitGo, the creator and custodian of WBTC, announced it would enter into a “strategic partnership” with BiT Global, Justin Sun, and the Trong ecosystem as part of a corporate restructuring in October.

Under the new structure, BiT Global Trust would act as the custodian of the Bitcoin backing WBTC, with BitGo, BiT Global, and a BiT Global subsidiary in Singapore each holding one of the three multisig keys underpinning WBTC.

Several leading DeFi protocols investigated offboarding WBTC or limiting their exposure to the token in response to the news. BA Labs, a risk adviser to Sky (formerly MakerDAO), alleged that Sun likely controls BiT Global through an opaque web of shell companies, nominee directors, and affiliates.

BA Labs noted that Sun’s involvement with Huobi and Truecoin precipitated the failure of Huobi’s HUSD and HBTC tokens, and TrueCoin’s TUSD suffering multiple depegs. In September, TrueCoin also settled charges from the U.S. Securities and Exchange Commission alleging that TUSD hasn’t been collateralized by U.S. dollars since 2022.

Issuers of Bitcoin-backed tokens sought to leverage the drama to capture market share from WBTC, with Coinbase revealing cbBTC was under development just four days after BitGo announced it would restructure.

According to CoinGecko, WBTC’s supply has fallen 12% to 135,824 tokens from 154,707 on Aug. 6. Coinbase’s cbBTC is now the second-largest tokenized ERC-20 with a circulating supply of 20,048.