$1 billion lawsuit against Coinbase over wBTC delisting filed by Kneupper & Covey
Coinbase’s decision to delist the pioneering wrapped Bitcoin product wBTC from its exchange has led to a lawsuit against it for more than $1 billion in damages, which Kneupper & Covey has just filed in the Northern District of California.
The lawsuit challenges Coinbase’s decision – and the damage it will cause not only to Kneupper & Covey’s client, BiT Global Digital Limited, but to consumers in the cryptocurrency industry as a whole.
In recent periods, Coinbase has been particularly busy onboarding various memecoins to its exchange whose only value lies in images of squirrels, cats, and dogs. Many of those newly-listed coins openly joke about being fundamentally valueless, as evidenced in their erratic price volatility. But despite these coins meeting its standards, Coinbase has suddenly claimed that wBTC doesn’t.
This decision to delist wBTC came shortly after Coinbase announced its own competing product, cbBTC, on September 12th. The lawsuit challenges the motivation behind this decision—and alleges that it violates numerous state and federal laws.
“We believe this decision sets a terrible precedent for everyone in the cryptocurrency space,” said attorney Kevin Kneupper. “If an exchange of Coinbase’s size can delist a cryptocurrency just as it plans to launch its own competing product, who’s safe? And who’s next?”
To put things in perspective, wBTC was the first wrapped Bitcoin product, an innovative method of unlocking value in Bitcoin for use on other blockchain networks, such as Ethereum. It has been the de-facto standard bearer for wrapped Bitcoin with leading market share since 2018. The user “wraps” their Bitcoin by depositing it into the digital wallet of a trusted custodian, and subsequently receives a token or digital coin (i.e. wBTC) on another blockchain network. The Bitcoin is then held in trust for the user.
But the lawsuit alleges that Coinbase is engaging in anticompetitive conduct to push wBTC out of the US market—to make way for its own competing product. Coinbase even touted a tweet on its website describing cbBTC as “super strategic to Coinbase” and specifically predicting that cbBTC “passes WBTC in supply within 6 months of launch….”
The damages are alleged to be in excess of $1 billion.
“We think a jury will see this for exactly what it is,” said Mr. Kneupper. “Our client plans to pursue the lawsuit aggressively and get to the bottom of things using the tools in the discovery process. We plan to make sure the law is followed, and that cryptocurrency users get to choose which product they prefer. That’s the vision of the blockchain—a decentralized world where users decide for themselves instead of centralized entities who stand in the middle and take a cut.”