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Judge Dismisses BiT Global’s Request to Block Coinbase’s WBTC Delisting
A federal judge has denied BiT Global’s request for a temporary restraining order, finding that the Hong Kong-based firm failed to demonstrate an imminent and irreparable harm that would result from Coinbase’s plan to delist WBTC, or Wrapped Bitcoin.
During the hearing, Judge Araceli Martínez-Olguín asked BiT Global’s counsel how a loss of profits could be considered irreparable harm, as BiT Global had alleged. Kneupper & Covey Partner Cyclone Covey responded by saying that a 5% drop in WBTC’s supply immediately followed Coinbase’s delisting announcement.
Coinbase’s attorney, WilmerHale Partner Sonal Mehta, countered that WBTC’s trading volume on Coinbase constitutes less than 1% of WBTC’s overall trading, which could not result in “lost sales.” She also said that WBTC’s supply was already dropping before Coinbase’s delisting move.
Background
BiT Global sued Coinbase last week, alleging that the exchange’s plans to delist WBTC on Thursday, while promoting its own version of wrapped Bitcoin, amounted to unfair business practices. As a custodian for WBTC reserves alongside BitGo, BiT Global sought a judgment prohibiting Coinbase from delisting the $14 billion product from its exchange.
Coinbase’s Motivations
Responding to BiT Global’s lawsuit, Coinbase said its decision to delist WBTC was motivated by “unacceptable risk that control of WBTC would fall into the hands of Justin Sun,” the co-founder of Tron, a layer-1 blockchain.
Justin Sun’s Involvement
Sun serves as an advisor to BiT Global, according to Robert Liu, a board member at BiT Global. In an October interview with CoinDesk, Liu said that Sun also acts as a “major financial supporter” of WBTC’s revamped custody setup.
WBTC’s Use Cases
Wrapped Bitcoin, whether issued by Coinbase or BitGo and BiT Global, is commonly used in decentralized finance, or DeFi. Backed 1:1 with Bitcoin reserves, the products enable users to effectively use Bitcoin in lending, borrowing, and trading via decentralized applications.
Conclusion
The judge’s decision to deny BiT Global’s request for a temporary restraining order marks a significant setback for the Hong Kong-based firm, which had sought to block Coinbase’s plan to delist WBTC. The outcome highlights the ongoing tensions between the two companies, with Coinbase citing concerns over the potential risks posed by Justin Sun’s involvement in WBTC’s custody setup.
FAQs
What is WBTC?
WBTC, or Wrapped Bitcoin, is a digital asset backed 1:1 with Bitcoin reserves, enabling users to use Bitcoin in lending, borrowing, and trading via decentralized applications.
Why is Coinbase delisting WBTC?
Coinbase is delisting WBTC due to concerns over the potential risks posed by Justin Sun’s involvement in WBTC’s custody setup, as well as the lack of transparency and control over the asset’s distribution.
What is the significance of Justin Sun’s involvement in WBTC?
Justin Sun, the co-founder of Tron, serves as an advisor to BiT Global and has been accused of fraud and market manipulation in an SEC lawsuit. His involvement in WBTC’s custody setup has raised concerns over the potential risks to the asset’s integrity and stability.
What is the current state of WBTC’s supply?
According to CoinGecko, the circulating supply of WBTC has reached 20,700, giving the asset a $2.1 billion market cap. However, the supply has been dropping before Coinbase’s delisting move, with the company citing concerns over the asset’s lack of transparency and control.
What is the future of WBTC?
The future of WBTC remains uncertain, with Coinbase’s delisting move expected to have a significant impact on the asset’s market capitalization and adoption. BiT Global’s efforts to promote WBTC and its revamped custody setup may face significant challenges in the wake of the judge’s decision to deny its request for a temporary restraining order.
