A US federal judge dismissed orders sought by BiT Global to restrain Coinbase from delisting Wrapped Bitcoin (WBTC).
Wednesday’s ruling by Judge Araceli Martínez-Olguín denied the argument submitted by Hong Kong-based BiT Global to prevent Coinbase from the scheduled delisting of WBTC. The Judge held that the plaintiff failed to demonstrate the imminent and irreparable harm that would arise if the defendant delisted WBTC.
Coinbase Victory over BiT Global
Judge Martínez-Olguín informed BiT Global’s attorney that evidence on what would come is missing, hence the decision not to halt Coinbase’s delisting plans.
The ruling arose from a suit filed by BiT Global last week alleging the US-based crypto exchange harbored plans of delisting WBTC. The plaintiff submitted that the latter sought to promote an in-house version of the wrapped Bitcoin, thus deploying unfair business practices.
BiT Global, which alongside BitGo is the custodian for the WBTC reserves, sought a prohibiting ruling to prevent Coinbase from delisting the $14B product.
Coinbase’s response to the lawsuit illustrated that the move to delist WBTC arose from the unacceptable risk of Justin Sun controlling WBTC. The co-founder of Tron, a layer-1 blockchain, vigorously denies the Coinbase allegations that he faces fraud and market manipulation in the lawsuit levelled by the Securities and Exchange Commission (SEC) last year.
The contest became evident when Coinbase unveiled the wrapped Bitcoin product, cbBTC. Sun disparaged the product, labelling it the ‘Central Bank Bitcoin’, which marks the dark day for Bitcoin.
In an October interview with CoinDesk, BiT Global board member Robert Liu admitted Sun is serving in an advisory capacity for the same entity. He later revealed that Sun grants major financial support to the WBTC’s revamped custody platform.
The hearing had Judge Martínez-Olguín inquire from BiT Global how profit loss is an irreparable harm, as the counsel alleged. Kneupper & Covey Partner Cyclone Covey indicated that WBTC supply plunged following Coinbase’s delisting announcement.
Coinbase counsel dismissed the claim, indicating that the trading volume on the crypto exchange accounts for barely 1% of the WBTC’s entire trading. Consequently, it would not amount to lost revenue. Besides, the WBTC supply was declining before the delisting move by Coinbase.
The counsel submitted that the issue allows Coinbase to execute its plans to safeguard the platform. The attorney dismissed the case as not involving monopolies and antitrust claims.
What is Wrapped Bitcoin?
The WBTC involves a token backed by BTC reserves utilized across the decentralized finance, irrespective of the party issuer – BitGo, Coinbase and BiT Global. It allows the users to effectively utilize their Bitcoin to lend, borrow and trade through the decentralized platforms.
BitGo revealed in August that it is partnering with BiT Global by utilizing the Hong Kong-based entity to diversify WBTC and supporting it in a multi-jurisdictional way. BitGo reveals that it is establishing Singapore-based operations following community feedback.
The three entities would all hold a single private key, though two were needed for minting and burning WBTC.
Coinbase Versus BiT Global Explained
Coinbase unveiled the cbBTC, whose circulating supply hit 20,700 with a market value of $2.1 billion per CoinGecko data. After unveiling Ethereum and the network scaling solution Base, the trading platform indicated plans to add cbBTC to Solana.
Meanwhile, a Tuesday interview with BiT Global’s Liu disclosed that Coinbase decided to delist WBTC from a single email exchange. The Hong Kong entity issued a generic inquiry regarding the revamped custodial setup of WBTC though yet to hear back.
Coinbase responded to the suit with an exhibit that captured specific inquiries regarding the BiT Global, Sun and WBTC ties.
An email dated October 24 cited the collateral records of WBTC issued on the Tron inquiring on the token’s backing. The WBTC dashboard previously captured information indicating the ongoing reassessment of WBTC viability on Tron.
Liu admitted that many DeFi projects could not leverage the WBTC on the Sun’s Tron. He decried the incompatibility of Tron and Ethereum, thus denying developers the capability of porting current projects to Tron’s network.
Liu admitted that unless they address the cross-chain deployment challenges, the Tron-based WBTC lacks real market demand. This explains the decision to off-board the WBTC.
Liu confirmed that while BiT Global’s headcount rose to 30, the ongoing scrutiny is yet to derail the WBTC project. Recently, it scaled the institutional merchants to distribute the Wrapped Bitcoin.
However, Liu questions the surge in regulatory scrutiny targeting Bit Global and WBTC. The executive wonders why the crusade targets a single individual simply to destroy him.
Editorial credit: photo_gonzo / Shutterstock.com
