Coinbase has decided to remove wBTC due to the "unacceptable risk" that the widely-used Bitcoin alternative on Ethereum might be under Justin Sun's control. This revelation was disclosed in a legal filing as part of a lawsuit concerning Coinbase's decision.

Market analysts had speculated about Coinbase's prior decision to delist wBTC, which was initially attributed to concerns regarding its listing standards without further context. The issuer of wBTC, BiT Global, recently filed a lawsuit claiming that Coinbase had given priority to its competing asset, cbBTC.

Nonetheless, in a detailed response, Coinbase clarified that the main reason behind their decision was related to the involvement of Justin Sun, a controversial figure in the crypto industry known for his connections to alleged fraud and market manipulation. Sun was associated with wBTC through a partnership revealed last August, raising red flags for Coinbase.

According to Coinbase, questions about BiT's reliability as a steward of wBTC were directly linked to Sun's affiliation with it. After being asked to clarify its ownership and Sun's role, BiT Global did not respond.

Consequently, Coinbase concluded that Sun's ties to wBTC posed a significant risk to its customers and the integrity of its platform, which led to the delisting.

The status of Justin Sun's involvement with BiT remains unclear, as their legal representatives have not responded to inquiries. Yet, the mere association with Sun was deemed sufficient for Coinbase to sever its ties with wBTC, underscoring the concerns about potential links to previous fraudulent activities.