BiT Global, a leading crypto custody firm associated with entrepreneur Justin Sun, has officially dropped its lawsuit against Coinbase regarding the delisting of Wrapped Bitcoin (WBTC). This decision marks the end of a prolonged legal battle that shed light on the escalating tensions between centralized exchanges and token custodians as they vie for control over critical infrastructure within the crypto space.
The lawsuit was initially filed on June 6 in the US District Court for the Northern District of California. The joint stipulation of dismissal, as detailed in the court document, signifies the conclusion of the case with prejudice, meaning that it cannot be refiled in the future. Both BiT Global and Coinbase have agreed to bear their own legal expenses, and any settlement terms, if applicable, remain undisclosed.
The dispute between the two parties stemmed from Coinbase’s announcement to delist WBTC due to governance and risk concerns that no longer aligned with its listing standards. BitGo, the primary custodian for WBTC, had recently partnered with BiT Global to diversify the token’s Bitcoin reserve holdings outside the US, with BiT Global acting as a co-custodian and relocating a portion of the reserves to Hong Kong. This move raised eyebrows in the industry due to BiT Global’s connection to Sun, who was under regulatory scrutiny in the US at the time.
Coinbase argued that entrusting WBTC to an entity linked to Sun posed a significant security and market integrity risk for users. In response, BiT Global alleged that Coinbase’s decision to delist WBTC was driven by a conflict of interest. The lawsuit claimed that Coinbase aimed to sideline WBTC in favor of its own wrapped Bitcoin token, cbBTC, which was launched shortly after the delisting.
Despite BiT Global’s efforts, the case faced setbacks along the way. In March, the firm’s motion for a preliminary injunction was denied by Judge Araceli Martinez-Olguín, who ruled that there was no imminent harm from the delisting. By May, during a hearing, the judge hinted at granting Coinbase’s motion to dismiss the case, citing a lack of legal grounds for further proceedings.
In light of the unfavorable court rulings, BiT Global chose to withdraw the lawsuit before a formal judgment was issued. The company has not publicly disclosed the reasons for its decision to drop the case and has remained silent on media inquiries. Conversely, Coinbase has reiterated its stance on not relisting WBTC, as confirmed by the exchange’s Chief Legal Officer, Paul Grewal, in a social media post on June 9.
This legal battle underscored the increasing significance of custody decisions and token listing policies in an industry that lacks consistent regulatory oversight. While WBTC continues to dominate the market in terms of wrapped Bitcoin tokens, Coinbase’s cbBTC has gained significant traction since its launch.
In conclusion, the evolving dynamics between centralized exchanges and custodians reflect the ongoing struggle for control over critical crypto infrastructure, with regulatory uncertainties adding complexity to the landscape.