Coinbase Faces Criticism For Linking wBTC Delisting To Justin Sun
Coinbase was criticized for delisting wBTC, citing risks associated with Justin Sun without providing a technical justification. Critics point out the irony as Coinbase itself faces numerous regulatory investigations. On December 17, Coinbase responded to a lawsuit from BiT Global, which accused the exchange of harming the wrapped Bitcoin (WBTC) market by delisting the WBTC token from its platform in November.
Coinbase says ‘unacceptable risk’
The crypto community has slammed Coinbase’s rationale for delisting Wrapped Bitcoin (WBTC) after it linked its decision to “unacceptable risks” associated with Tron founder Justin Sun.
Coinbase cited concerns about Sun in its filings, citing financial misconduct allegations and ongoing regulatory investigations as reasons for the delisting. The exchange expressed doubts about BiT Global’s credibility, highlighting the company’s ties to Sun.
“At the conclusion of its due diligence, Coinbase concluded that Mr. Sun’s affiliation with and potential control of wBTC presented an unacceptable risk to its customers and the integrity of the exchange,” the filing states. The explanation sparked sharp criticism from the cryptocurrency community, with many questioning whether Coinbase’s legal and technical justifications for the move were sufficient.
Bit Global says delisting is illegal
BiT Global argued in the lawsuit filed on December 13 that the delisting was illegal and would cause irreparable harm to WBTC’s economy. The lawsuit also criticizes Coinbase for listing other coins, including meme coins, which BiT Global claims are less relevant than WBTC.
BiT believes that COIN’s launch of its own tokenized Bitcoin product, cbBTC, violates antitrust laws and may lead to a monopoly in the tokenized Bitcoin market, thereby inhibiting competition.
The exchange argued that its internal processes led to the decision to delist WBTC due to concerns that its ties to Sun could compromise the platform’s security and customer trust.
Critics note the irony
Bitcoin enthusiasts and critics of the exchange, such as prominent figure Pledditor, have condemned the exchange’s actions, accusing it of relying on weak grounds to delist WBTC.
Although Coinbase gave its reasons for delisting wBTC in a court filing today, Pledditor noted that “it’s basically just that they don’t like Justin Sun. They didn’t give any technical or legal arguments why wBTC couldn’t be listed.” “This Just guilt of association,” he added.
Critics point out the irony as the legitimacy of cryptocurrency exchanges also faces scrutiny with its own legal challenges. Sun has been the target of multiple regulatory investigations and is currently facing charges from the U.S. Securities and Exchange Commission for alleged violations, including fraud.
Additionally, VanEck advisor Gabor Gurbacs highlighted the irony of Coinbase treating Sun in this way. “Coinbase itself is under SEC and many other investigations, probably more than Justin and his businesses. Questioning someone’s reputation in this way may just bring out skeletons in their own closet,” he commented.
Coinbase is facing SEC charges, including a lawsuit filed in June 2023, alleging that the exchange offered unregistered securities through tokens listed on its platform. Additionally, in January 2023, Coinbase reached a $100 million settlement with the New York Department of Financial Services over concerns about its compliance program.
