Justin Sun’s BiT Global, the firm that recently became a key stakeholder in the wrapped bitcoin (wBTC) ecosystem, is suing crypto exchange giant Coinbase, which last month decided to delist the asset and launch a competing product.
On Nov. 19, Coinbase announced it would delist WBTC starting Dec. 19, 2024, citing a periodic review of its “listing standards.” The move came months after BitGo, which has served as the primary custodian for wBTC since it launched in January 2019, disclosed it would distribute control over the project's custody to three entities, including the Hong Kong-based trust company BiT Global, which has ties to Sun.
The so-called “strategic partnership between BitGo, Justin Sun and the Tron ecosystem” was received with skepticism from many in the crypto community. For instance, major DeFi projects MakerDAO and Aave began looking into removing wBTC as a collateral asset, though ultimately did not.
WBTC is the first and largest tokenized version of BTC that trades on Ethereum and other blockchains. It has a current market capitalization of over $13.4 billion — leaps and bounds larger than other onchain representations of bitcoin like renBTC, 21.co’s wrapped bitcoin and iBTC, according to CoinGecko.
Under the new deal, BitGo will manage and operate the wBTC business, and BiT Global Trust will act as the custodian of the underlying wBTC collateral. BitGo, BiT Global and a BiT Global subsidiary in Singapore would each hold one of the three wBTC multisig keys.
Law firm Kneupper & Covey, representing BiT Global, filed the suit claiming that Coinbase’s decision to proceed with the wBTC delisting is anti-competitive and violates “numerous state and federal laws.” The delisting will also “damage” BiT Global.
“We believe this decision sets a terrible precedent for everyone in the cryptocurrency space,” attorney Kevin Kneupper said in a statement on Friday. “If an exchange of Coinbase’s size can delist a cryptocurrency just as it plans to launch its own competing product, who’s safe? And who’s next?”
“Coinbase is committed to maintaining the high integrity of our listing standards, and we regularly evaluate assets listed on our platform," a Coinbase representative told The Block. "Should an asset fail to meet those standards, it is delisted.”
The law firm noted that in recent weeks, Coinbase has listed a number of “fundamentally valueless” memecoins and “despite these coins meeting its standards, Coinbase has suddenly claimed that wBTC doesn’t.”
“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 reads.
Coinbase launched cbBTC on Ethereum and its L2 network Base in September 2024. It now represents the second-largest tokenized version of bitcoin, with a market cap of just above $2 billion.
Despite backlash to Sun’s growing involvement in the project, wBTC’s market capitalization has grown significantly since BitGo’s announcement in August, when it had a market cap of around $8 billion.
The Block has reached out to Kneupper & Covey and Tron representatives for comment.
Sarah Wynn contributed additional reporting.
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