Coinbase faces a backlash in favor of cBTC

Wrapped Bitcoin (wBTC) group has expressed surprise and dismay at Coinbase's decision to cancel the token. In a statement shared on X, the crypto exchange giant urged them to reconsider this decision and continue to support the token business.

According to the team, the token bills itself as a decentralized and transparent packaged BTC product, backed by “innovative methods and strong governance.”

They even emphasized that they maintain active communication and cooperation with due diligence processes, including custody processes, on-chain verification and regulatory compliance, as well as those involving Coinbase.

“We strongly believe that transparency and decentralization are core values ​​of the crypto industry, and wBTC reflects these principles. We ask Coinbase to reconsider this decision and continue to support wBTC trading.”

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Coinbase to stop wBTC trading

The wBTC response comes after Coinbase announced that it will end trading for wBTC on December 19, 2024. In a recent update, the exchange said it had moved wBTC's order books into a limit-only mode, allowing users to place and cancel orders while allowing token transfers. write off. Although Coinbase described the decision as part of regular asset reviews, the lack of transparency has fueled criticism.

Many members of the community believe that Coinbase has taken steps to support its own token Bitcoin, cbBTC, which allows the balance to be cooled – a feature that wBTC does not support. Critics say the decision stifles competition and that Coinbase has backed it up with vague customer protection narratives.

The controversy has brought new attention to the structure of wBTC, with BitGo CEO Mike Belshe reiterating an old statement that remains part of the ongoing controversy.

“There is no freezing function in WBTC modern contracts that surprises people because all stablecoins have the ability to freeze money. At first glance, of course, you have some kind of token and (if) it gets into the hands of a bad actor, you want to freeze it.”

But remember, once someone gives you the power to bind, do you trust them to use that freezing power for a good purpose or a purpose you've agreed to?”

Justin Sun's Grip on wBTC

Capped Bitcoin – potentially the largest Bitcoin product – has also attracted its fair share of scrutiny this year. Tron founder Justin Sun has reportedly gained influence over the wBTC protocol after BitGo, its main custodian, entered into a partnership with Sun, a Hong Kong-based trust with BiT Global.

Historically, BitGo has managed custody and the underlying Bitcoin tokens backing wBTC, but in August announced plans to share control with three parties for added geospatial resiliency. This strategic shift involving Sun and the Tron ecosystem has raised concerns in the crypto industry, with responses such as MakerDAO limiting DAI's connection to wBTC and Aave monitoring the situation.