A US federal judge has rejected orders requested by BiT Global to prevent Coinbase from delisting Wrapped Bitcoin (WBTC).
Wednesday’s ruling by Judge Araceli Martínez-Olguín rejected the argument made by Hong Kong-based BiT Global to prevent Coinbase from delisting WBTC. The judge found that the plaintiff had failed to demonstrate the imminent and irreparable harm that would result if the defendant delisted WBTC.
Coinbase wins on BiT Global
Judge Martínez-Olguín informed BiT Global’s lawyer that there was a lack of evidence as to what was going to happen, hence the decision not to halt plans to delist Coinbase.
The decision follows a complaint filed by BiT Global last week, alleging that the US-based crypto exchange was considering delisting WBTC. The plaintiff argued that the latter sought to promote an internal version of wrapped Bitcoin, thereby deploying unfair commercial practices.
BiT Global, which alongside BitGo is the custodian of WBTC reserves, requested a cease-and-desist order to prevent Coinbase from delisting the $14 billion in proceeds.
Coinbase’s response to the lawsuit showed that the decision to delist WBTC stemmed from the unacceptable risk of Justin Sun controlling WBTC. Co-founder of Tron, a layer 1 blockchain, vigorously denies Coinbase’s allegations that he faces fraud and market manipulation in Securities and Exchange Commission (SEC) lawsuit last year.
The competition became evident when Coinbase unveiled the wrapped Bitcoin product, cbBTC. Sun disparaged the product, calling it “Central Bank Bitcoin,” marking a dark day for Bitcoin.
In an interview given in October to CoinDesk, BiT Global board member Robert Liu admitted that Sun acted in an advisory capacity for the same entity. He then revealed that Sun was giving major financial support to WBTC’s new curatorial platform.
During the hearing, Judge Martínez-Olguín asked BiT Global how the loss of profits constitutes irreparable harm, as the lawyer alleged. Kneupper & Covey partner Cyclone Covey said WBTC’s supply plunged following news of Coinbase’s delisting.
Coinbase’s lawyer dismissed the complaint, saying trading volume on the crypto exchange represents barely 1% of all WBTC trading. This would therefore not represent a loss of income. Additionally, WBTC supply was declining before Coinbase’s withdrawal decision.
The lawyer argued that the issue allows Coinbase to implement its plans to protect the platform. The lawyer dismissed the case on the grounds that it did not involve monopolies or antitrust suits.
What is Wrapped Bitcoin?
WBTC involves a token backed by BTC reserves used in decentralized finance, regardless of the issuer party – BitGo, Coinbase and BiT Global. It allows users to efficiently use their Bitcoin to lend, borrow and trade through decentralized platforms.
BitGo revealed in August its partnership with BiT Global using the Hong Kong-based entity to diversify WBTC and supporting it in a multi-jurisdictional manner. BitGo reveals it is establishing Singapore-based operations following community feedback.
All three entities would hold a single private key, although two were needed to create and burn WBTC.
Coinbase and BiT Global explained
Coinbase unveiled cbBTC, whose circulating supply reached 20,700 with a market value of $2.1 billion according to CoinGecko data. After unveiling Ethereum and network scaling solution Base, the trading platform has indicated plans to add cbBTC to Solana.
Meanwhile, an interview with BiT Global on Tuesday Liu revealed that Coinbase decided to remove WBTC from a single email exchange. The Hong Kong entity has launched a generic inquiry regarding the new WBTC custody setup, but has not yet received a response.
Coinbase responded to the complaint with a supporting document containing specific requests regarding ties between BiT Global, Sun and WBTC.
An email dated October 24 cited WBTC collateral documents issued on the Tron requesting information about the token. support. The WBTC Dashboard previously captured information indicating the ongoing reassessment of WBTC’s viability on Tron.
Liu admitted that many DeFi projects could not leverage WBTC on Sun’s Tron. He denounced the incompatibility of Tron and Ethereum, thus denying developers the possibility of porting current projects to the Tron network.
Liu admitted that unless cross-chain deployment challenges are addressed, Tron-based WBTC lacks real market demand. This explains the decision to leave WBTC.
Liu confirmed that although BiT Global’s headcount has grown to 30 people, the ongoing scrutiny has not yet derailed the WBTC project. Recently, he asked institutional traders to distribute Wrapped Bitcoin.
However, Liu questions the rise in regulatory scrutiny targeting Bit Global and WBTC. The executive wonders why the crusade targets a single individual with the sole aim of destroying him.
Editorial credit: photo_gonzo / Shutterstock.com
