Coinbase Lawsuit: The Details and Updates
Recently, the news has been rife with the controversy of Coinbase versus BiT Global Digital Limited, two exchanges that may be seeing each other in court soon. But what is the lawsuit, and is either side in the right?
Keep reading as we dive into what this lawsuit is, the argument of both sides and some recent updates which have come onto our radar.
The Coinbase Lawsuit
Coinbase is currently being sued for $1 billion USD by the Hong Kong-based company BiT Global Digital. They allege that Coinbase acted illegally on December 13th when they chose to delist the wBTC or Wrapped BTC token from their exchange. They state that Coinbase only delisted it due to creating their own similar token, cbBTC, which launched in November 2024.
Additionally, BiT Global Digital states that the delisting has violated Sherman Act and the Lanham Act and caused immediate harm to the sales of wBTC. Although Coinbase has submitted its legal response, there is no word from the judge yet as to whether or not this case will be held in court.
The Details of the Coinbase Lawsuit
Just like any court case, the basics you see are not everything that is going on behind the scenes, so below, we will be breaking down some of the details for you.
Was the Coinbase Delisting Justified?
Coinbase is a legally (well gray area) operating cryptocurrency exchange in the United States, and as such, they are allowed to create their own policies for their exchange.
One of Coinbase’s main policies is that any token listed on its platform must maintain financial transparency with Coinbase. This means that when they request financial information, it must be provided.
This is the regulation that wBTC broke when, in October and November, Coinbase requested financial information from the wBTC creators, specifically asking about the involvement and holdings of Justin Sun—who helped launch wBTC after launching TRON.
wBTC failed to provide this information, and as such, Coinbase announced the token would be delisted. Additionally, when Justin Sun issued a rebuttal to this accusation, Coinbase discussed his financial misconduct and the fact that he has been accused of fraud and market manipulation. Not only that, but Justin Sun has been sued by the SEC for market manipulation, further strengthening Coinbase’s case.
If that weren’t enough, the lawsuit filed on December 13th was filed nearly a month after the delisting and said that the delisting caused immediate and drastic harm. This, under further investigation, turned out not to be the case, as wBTC only made up less than 1% of the trading volume on Coinbase. Not only that, but BiT Global waited to file their lawsuit until after the had filed a restraining order for a non-related incident—meaning it couldn’t have been that harmful.
BiT Global’s Case Against Coinbase
Now, after all of that, you might be thinking that BiT Global doesn’t have much of a case left, which is true, though they do have a few good points.
While we don’t believe in the “immediate and financial harm” they listed in their lawsuit, we do believe the part of the lawsuit where they pointed out the unfairness of Coinbase’s arbitrary listing requirements.
The lawsuit alleges that if Coinbase was so worried about its financial structure, then other extremely risky projects, like DogWifHat (WIF) and Pepecoin (PEPE), should also be delisted, and we are honestly inclined to agree. Neither of these projects is more than a simple memecoin, and if they are allowed to be on the platform, then it’s hard to shun wBTC over Justin Sun’s involvement in the token.
That being said, we don’t think this is enough to sue over. Plus, one of the major accusations is that BiT Global also alleges that Coinbase delisted wBTC to promote their own token and create a monopoly, and we find that not the be the case.
Are wBTC and cbBTC the Same?
Essentially, yes, both wBTC and cbBTC were created to allow users to convert their Bitcoin to an ERC-20 token for use on Ethereum-run platforms. However, because of the nature of these tokens, there isn’t any insane profit to be made.
What do we mean? Well, in either case, whether you use wBTC or cbBTC, the BTC provided is locked up in a custodian account (on BiT Global for wBTC and on Coinbase for cbBTC), but regardless, you can convert it back at any time. This means neither of these tokens is an investment vehicle.
Rather, they are just utility tokens, and the exchange only gets money via fees—small amounts charged to complete the conversion and various actions in the token. And that’s it. BiT Global alleges that this amount of money is significant, but we find it’s not.
Additionally, while both of these tokens perform as a utility token, there are many more tokens in this space, many of which are listed on Coinbase. While they may not be backing with Bitcoin the same way, all of them are backed by some asset (basically any stablecoin built on ERC-20 procedures qualifies), and unless Coinbase delists all of those in favor of its cbBTC, it does not create a monopoly.
Who Will Win the Coinbase Lawsuit?
Honestly, we think that Coinbase will come out on top for this one. Their case is stronger, and BiT Global’s association with Justin Sun will only do more harm in the long run than good.
Don’t celebrate too soon however, because we do think that BiT Global has a point—if Coinbase is listing DogWifHat and PepeCoin, then it should also be listing Wrapped Bitcoin, because they can’t just hold wBTC to their arbitrary listing rules. We wouldn’t be surprised if Coinbase ends up relisting wBTC in the end. Still, we doubt they will be ordered to pay restitution as a federal judge already ruled it is within Coinbase’s right to delist products on their website but BiT Global says it isn’t giving up yet.
Regardless, we don’t have a crystal ball, so ensure you keep an eye on this court case if you are interested in learning about the final outcome.
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