A federal judge sided with Coinbase in a hearing with BiT Global by saying she would not issue a temporary restraining order to stop the exchange from delisting Wrapped Bitcoin (WBTC).
In a Dec. 18 virtual hearing in the United States District Court for the Northern District of California, Judge Araceli Martínez-Olguín said BiT Global’s legal team had failed to show “imminent irreparable harm” in its arguments over Coinbase delisting wBTC. BiT Global filed a lawsuit against the crypto exchange on Dec. 13, claiming that the firm had harmed the wBTC market by choosing to delist the coin in November.
The judge said the fact that BiT Global waited a few weeks between the Coinbase announcement and the lawsuit “somewhat” undermined its arguments. She added that Bit Global had provided “no evidence [...] about what is to come” and said the legal team’s arguments were “speculative” rather than based on what would happen in the market.
Coinbase chief legal officer’s response to the Dec. 18 ruling. Source: Paul Grewal
Coinbase announced on Nov. 19 that it would suspend wBTC trading on the exchange starting on Dec. 19. In its lawsuit, BiT Global alleged that the exchange’s decision would result in massive financial losses for wBTC holders.
The chicken or the egg on delisting wBTC?
BiT Global, affiliated with Tron founder Justin Sun, had been attempting to secure a TRO from the judge before the delisting became official on Dec. 19. In its response to the lawsuit, Coinbase claimed its decision was based on an “unacceptable risk that control of wBTC would fall into the hands of [Sun],” who “reportedly violated industry and government standards intended to prevent fraud.”
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The custodian holding wBTC’s Bitcoin reserves, BitGo, announced in August that it would share control of the crypto with BiT Global in a partnership with Sun. In its court filing, Coinbase said it had “serious questions” about BiT Global’s reliability with wBTC due to Sun’s involvement and previous cases brought against him by the US authorities, including the Securities and Exchange Commission (SEC).
WilmerHale partner Sonal Mehta, representing Coinbase, argued in the Dec. 18 hearing that rather than the exchange’s delisting announcement, the circulation of wBTC first started to drop when Bit Global said Sun would be involved in the project. Kneupper and Covey partner Cyclone Covey, representing BiT Global, claimed Sun was a “pretext” for Coinbase to delist wBTC.
“On one hand, Coinbase is publicly stating — their top people are publicly stating — the SEC and FBI aren’t to be trusted,” said Covey, referring to the commission’s lawsuit with the exchange. “But when it comes to Justin Sun, all of a sudden, they are to be trusted.”
The lawyer added:
“[Coinbase] didn’t announce any problems or say ‘We have a problem when Mr. Sun announces’ in August. They waited until October to start even ‘performing due diligence’, and then didn’t announce this until November.”
Judge Martínez-Olguín left the door open for BiT Global’s lawyers to make additional arguments to block Coinbase’s delisting.
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