Coinbase slammed for linking WBTC delisting to Justin Sun
2024-12-18
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The cryptocurrency community has fired back against Coinbase’s explanation for delisting Wrapped Bitcoin, which the exchange linked to the “unacceptable risk” associated with Tron founder Justin Sun.
On Dec. 17, Coinbase filed a response to a lawsuit brought by Sun-affiliated BiT Global, which accused Coinbase of harming the Wrapped Bitcoin WBTC market by delisting WBTC in November.
In the filing, Coinbase cited risks tied to Sun, including accusations of financial misconduct and regulatory investigations.
The filing has drawn sharp criticism from within the crypto community, with many accusing Coinbase of failing to provide adequate legal or technical justification for the delisting.
Some have also highlighted that Coinbase itself has been under numerous investigations.
“Guilt by association”
Bitcoin enthusiast and Coinbase skeptic Pledditor took to X on Dec. 17 to criticize the exchange for what they described as a lack of substantive arguments in the delisting decision.
“It’s basically just they don’t like Justin Sun,” Pledditor stated, adding that it’s “just guilt by association.” 
The Coinbase filing referenced Sun’s involvement in alleged misconduct, stating that he has “reportedly violated industry and government standards intended to prevent fraud.” The exchange expressed doubts about BiT Global’s reliability due to its association with Sun.
“So too is any acknowledgement that he has repeatedly been accused of, investigated for, and sued for financial misconduct, and that reports of his alleged misdeeds abound in the press and crypto community more broadly,” Coinbase added.
Sun, the founder of the Tron (TRX) cryptocurrency, was hit with fraud and securities violation charges by the United States Securities and Exchange Commission (SEC) in March 2023.
He has also reportedly been the subject of an investigation by the US Federal Bureau of Investigation and the prosecutor’s office for the Southern District of New York.
SEC’s lawsuit against Coinbase is ongoing
Some prominent community members, such as VanEck adviser Gabor Gurbacs, have drawn attention to Coinbase’s legal troubles in the US in the context of the WBTC case.
“It’s ironic that Coinbase is treating Justin Tron this way. Coinbase itself is under SEC and numerous other investigations, probably many more than Justin and his businesses,” Gurbacs wrote in an X post reposted by Sun.
“Questioning someone’s reputation this way might just bring out skeletons from their own closet,” he added.
The US SEC sued Coinbase in June 2023 for alleged offering of unregistered securities, which came just a few months after the regulator charged Sun with fraud. The litigation is ongoing, with Coinbase’s chief legal officer Paul Grewal having publicly urged regulators to adopt a more constructive approach toward the crypto industry.
Previously, Coinbase reached a $100 million settlement with the New York Department of Financial Services over a case involving its compliance program in January 2023.