BiT Global has initiated legal action against Coinbase, the largest cryptocurrency trading platform in the United States. This development, as revealed in a December 13 court filing, centers around allegations of anti-competitive practices in the wrapped Bitcoin (WBTC) market.
Claims of Favoritism Toward Coinbase Wrapped Bitcoin (cbBTC)
The crypto custodian, linked to Justin Sun, has accused Coinbase of unfairly delisting WBTC in favor of its proprietary product, Coinbase Wrapped Bitcoin (cbBTC). The lawsuit alleges that this move was designed to stifle competition and solidify Coinbase’s dominance in the wrapped Bitcoin sector.
Antitrust Allegations
According to the filing, BiT Global claims Coinbase violated antitrust laws by replacing WBTC with cbBTC. The document suggests Coinbase strategically aims to control the wrapped Bitcoin market while increasing transaction revenues.
The lawsuit highlights that Coinbase’s approach, including its decision not to charge wrapping or unwrapping fees “today,” signals future plans to impose such fees once it eliminates competition.
Questioning Coinbase’s Listing Standards
BiT Global also disputes Coinbase’s justification for WBTC’s removal, which the exchange attributed to “listing standards.” The crypto custodian pointed to the recent listing of meme coins like PEPE and MOG as evidence that the delisting of WBTC was not based on quality concerns but rather a desire to capture market share.
The lawsuit states:
“The decision to allow users to trade these memecoins makes clear that Coinbase did not delist WBTC because of any listing standard, but because Coinbase coveted WBTC’s market share and wanted it for itself.”
Protecting Competition and Decentralized Innovation
Through this lawsuit, BiT Global seeks to restore competitive fairness and prevent further centralization in the cryptocurrency sector. The custodian aims to stop WBTC’s delisting and preserve decentralized innovation.
Shifts in the Wrapped Bitcoin Market
The wrapped Bitcoin ecosystem has faced significant shifts over the past year. After BitGo distributed custody control to multiple entities, BiT Global emerged as a key custodian for WBTC. However, Justin Sun’s association with BiT Global raised concerns within the decentralized finance (DeFi) community, prompting MakerDAO and Aave to reevaluate WBTC’s suitability as collateral.
Despite retaining WBTC as collateral, these events created uncertainty regarding its stability. To address these challenges, Coinbase and other firms introduced their own wrapped Bitcoin solutions. Coinbase’s cbBTC, launched on Ethereum and its Layer 2 network Base in September, has quickly gained traction. It is now the second-largest wrapped Bitcoin product, with a market capitalization of $2 billion.
WBTC Faces Supply Challenges
Although WBTC remains a prominent cryptocurrency with a $13.7 billion market cap, its supply has decreased by over 20,000 BTC, reflecting the ongoing challenges faced by the asset
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