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- The WBTC delisting faces criticism for unclear reasons tied to Justin Sun’s legal issues.
- Many question the fairness, as the platform behind the move is also under investigation.
Coinbase’s decision to delist Wrapped Bitcoin (WBTC) in November raised quite a stink in the cryptocurrency community. The exchange mentioned in its announcement that Justin Sun, the founder of the Tron network, posed “unacceptable risks” for the platform, which is why his tokens had been delisted.
In particular, the crypto community has many complaints about Coinbase’s explanation for this action, which lacks technical or legal foundation. This has amplified doubts about the bias of this decision.
Lawsuit Claims Market Harm from WBTC Delisting
On December 17, Coinbase filed its response to the lawsuit initiated by BiT Global – a company related to Sun. The Delhi court case alleges that Coinbase harmed the market for WBTC when it delisted the asset. They also explained the threats that Sun presented due to alleged embezzlement and ongoing probes when Coinbase responded to the recall.
The exchange added that it has complied with a legal notice that Sun has been accused of fraud and securities violations by the U.S. SEC in March 2023. Further, it can be noted that Sun is facing probes from the FBI as well as the U.S. prosecutor’s office of the southern district of New York. BiT’s Global services were a problem for Coinbase because of their association with Sun.
Generally, when Coinbase recently delisted some assets, it only signaled these issues but did not give detailed technicalities on the same. This has angered the community, with some arguing that Coinbase made some decisions depending on who they knew and not depending on facts.
Backlash Over Lack of Transparency in WBTC Decision
Some people from the Bitcoin community, along with some industry leaders, have not taken kindly to Coinbase’s explanation. Pledditor, one of the most active Bitcoin supporters, did not like the exchange’s position and said that the exchange accused a number of its users of hacking without real reasons and just because of “guilt by association.”
As observed by several others, it is quite rich that Coinbase now espouses this view. Another person, an adviser from the VanEck–Gabor Gurbacs, once spoke to the community, clarifying that Coinbase itself is under many investigations and one from the SEC over securities law violation. Gurbacs also commented on Justin Sun: Coinbase, or the company that you wield or co-own, has faced legal issues, too, so it’s questionable if this is the time to message Dave about legal troubles. The exchange is at the moment engaged in a legal battle with the SEC, where the latter accused Coinbase of offering unregistered securities.
Crypto Industry Reacts to Coinbase’s Legal Battles
The WBTC delisting case is not the only legal issue confronting Coinbase. However, the exchange is still engaged in an SEC lawsuit. In January 2023, the exchange paid the New York Department of Financial Services $100 million regarding compliance program matters. These ongoing investigations have led some people to wonder if Coinbase’s criticism of Sun is to divert its own legal and regulatory issues.
As the legal struggles continue, the crypto community still has its opinion on Coinbase’s actions. It was an aggressive decision to delist WBTC, and thus, whether it was a measure based on risk or external force is debatable.
