FOLLOW US

A California federal judge on Wednesday denied BiT Global's bid to block Coinbase from delisting its wrapped bitcoin product, wBTC, in a case where the cryptocurrency platform faces allegations of antitrust violations and $1 billion in claimed damages.

U.S. District Judge Araceli Martinez-Olguin ruled that BiT Global failed to provide sufficient evidence of imminent irreparable harm, calling much of the alleged harm "speculative."

The Dispute Over Wrapped Bitcoin

The lawsuit, filed by Hong Kong-based BiT Global Digital Ltd., accuses Coinbase of delisting wBTC to promote its own competing product, Coinbase Wrapped BTC. Wrapped bitcoin allows bitcoin to be traded on decentralized exchanges, and wBTC had been available on Coinbase since October 2020.

In November, Coinbase announced its decision to suspend trading of wBTC within 30 days, citing concerns over the potential influence of Justin Sun, a controversial figure in the cryptocurrency world linked to the Tron Foundation. Coinbase argued that the delisting was necessary to mitigate risks associated with Sun's involvement.

Bid for Temporary Restraining Order Denied

BiT Global sought a temporary restraining order (TRO) to halt the delisting, claiming it would cause irreparable harm by reducing market share and damaging its reputation. However, Judge Martinez-Olguin rejected the request, finding that BiT Global failed to substantiate its claims.

"Most of your pleadings have lots of speculation about what the harm could be," the judge said during a Zoom hearing.

The judge also questioned the delay in BiT Global’s filing, noting that it waited three weeks after Coinbase’s announcement to seek the TRO.

Arguments From Both Sides

BiT Global’s attorney, Cyclone Covey of Kneupper & Covey PC, argued that the delisting had already caused a 5% drop in wBTC circulation and that further harm would occur when the suspension was enacted.

He added that less sophisticated users, relying on Coinbase as a major U.S.-based exchange, could suffer financial losses.

However, Coinbase’s attorney, Sonal Mehta of WilmerHale, countered that the alleged harm was overstated, pointing out that Coinbase accounts for less than 1% of wBTC trading volume.

"The lost sales that BiT Global claims it will suffer are speculative," Mehta said, emphasizing that BiT Global’s delay in seeking relief undermined its claims of urgency.

Broader Allegations Against Coinbase

BiT Global’s lawsuit alleges that Coinbase violated the Sherman Act by attempting to monopolize the wrapped bitcoin market, engaged in trade libel, and interfered with prospective economic advantage. The complaint also includes claims under California’s Unfair Competition Law and the Lanham Act.

Coinbase maintains that its decision to delist wBTC was driven by security and governance concerns tied to Sun’s involvement, rather than anticompetitive motives.

Future Developments

While Judge Martinez-Olguin denied the TRO, she left the door open for BiT Global to seek an injunction if it could present stronger evidence of irreparable harm.

BiT Global’s case remains active, with potential implications for the wrapped bitcoin market and Coinbase’s competitive practices.

Representation

BiT Global is represented by Kevin Kneupper and A. Cyclone Covey of Kneupper & Covey PC. Coinbase is represented by Sonal N. Mehta, David Z. Gringer, and Paul T. Vanderslice of WilmerHale.