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ICYMI: Cryptocurrency custodian BiT Global took action against Coinbase last week for delisting wBTC.
Coinbase first announced its decision to delist wBTC back in late November, just a few months after launching CBBTC, its proprietary cryptocurrency.
Growing up with a father who was a lawyer, I was always told that there were three sides to every story: each side's side and then the truth.
Last night, Coinbase He responded For the BiT Global lawsuit, both parties have made some interesting arguments.
Coinbase files center around Justin Sun, who was Linked to wBTC Since August. Essentially, the company said that wBTC failed its listing criteria due to the “unacceptable risks” posed by Sun due to his “material involvement.”
“Consistent with this process, Coinbase conducted careful diligence, including asking BiT questions about who ultimately owns and controls BiT. BiT declined to answer, perhaps to obscure Mr. Sun’s role, as it did here. In concluding its efforts, Coinbase concluded that Mr. Sun’s affiliation with — and potential control of — wBTC “presents an unacceptable risk to its clients and the integrity of its exchange,” she said in her filing on Tuesday.
On the other hand, BiT claimed that Coinbase had ulterior motives for delisting wBTC, which would mean throwing its weight around as one of the top exchanges – forcing users to only access its wrapped Bitcoin offerings, rather than enabling a choice between the two.
“Having achieved the network effects that were its goal, it has now embarked on an attempt to use that power to replace cryptocurrencies created by others with their own copycat versions - with Coinbase taking short-term losses to keep profits for itself in the long-term as market share gains. wBTC is Coinbase's number one target BiT said last week.
BiT claims this is “a story as old as Silicon Valley,” and states that Google, Microsoft, and Facebook have all tried to take on the competition.
“The centralized platform gains more and more users through first mover advantage. It creates a moat for itself using network effects that trap those users on its platform. Then it starts changing the rules that got it there. After a temptation and a switch, the small entrepreneurs find themselves victims of a giant corporation.” She sees their innovations as merely a resource that can be seized by any means possible and absorbed into herself.
However, Coinbase said the exchange compensates a “small portion (less than 1%)” of wBTC trading. According to Coinbase, there is insufficient evidence to justify a court enforcing a temporary restraining order to force the exchange to continue hosting wBTC.
A hearing is scheduled in California later today, so we'll soon see how the two arguments play out.
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