A federal judge has ruled in favor of Coinbase, allowing the exchange to proceed with its plans to suspend trading of Wrapped Bitcoin (wBTC) despite a legal challenge from BiT Global.
On Dec. 18, during a virtual hearing in the U.S. District Court for the Northern District of California, Judge Araceli Martínez-Olguín declined to issue a temporary restraining order (TRO) to prevent Coinbase from delisting wBTC. This decision followed BiT Global’s Dec. 13 lawsuit alleging that Coinbase’s action would harm the wBTC market.
Judge Rejects Claims of Immediate Harm
BiT Global argued that delisting wBTC would result in significant financial losses for wBTC holders. However, Judge Martínez-Olguín ruled that the firm failed to demonstrate “imminent irreparable harm.” She noted that BiT Global’s weeks-long delay between Coinbase’s announcement in November and the lawsuit in December weakened its case.
Furthermore, the judge criticized BiT Global’s arguments as speculative, citing a lack of evidence to substantiate claims of market disruption.
Why Coinbase Chose to Delist wBTC
Coinbase announced on Nov. 19 that it would suspend trading of wBTC starting Dec. 19, citing concerns over the coin’s potential ties to Tron founder Justin Sun. In its court filings, Coinbase described Sun’s involvement with BiT Global, which shares control of wBTC’s reserves with BitGo, as an “unacceptable risk.”
The exchange pointed to Sun’s history of legal challenges in the U.S., including allegations of fraud by the Securities and Exchange Commission (SEC). Coinbase stated it could not risk exposure to potential misconduct tied to Sun’s association with the project.
BiT Global Challenges Coinbase’s Justification
BiT Global, reportedly affiliated with Justin Sun, sought to halt the delisting by claiming that Sun’s involvement was merely a “pretext” for Coinbase’s decision. Cyclone Covey, BiT Global’s attorney, accused Coinbase of acting inconsistently, highlighting that the exchange had criticized regulators like the SEC in other cases but relied on their claims against Sun to justify its actions.
Covey argued that Coinbase did not raise concerns about Sun’s involvement in wBTC until months after BitGo’s August announcement of the partnership with BiT Global. He alleged that Coinbase delayed its due diligence and acted without transparency.
Although Judge Martínez-Olguín denied the TRO, she left the door open for BiT Global to present additional arguments to potentially block Coinbase’s suspension of wBTC trading.
