Coinbase Wrapped Bitcoin (cbBTC) has made its way to the Solana network, and Coinbase’s Chief Legal Officer, Paul Grewal, has provided crucial insights about the company’s liability and Bitcoin custody terms, clarifying the extent of responsibility Coinbase holds towards users.
In a recent clarification, Grewal highlighted the custodian role Coinbase plays. He emphasized that if any Bitcoin (BTC) backing the newly launched Coinbase Wrapped Bitcoin is lost due to internal issues or an exploit, the platform’s liability is limited strictly to the specific amount of BTC lost. Coinbase users should understand that they will only receive a proportional share of the remaining BTC.
Coinbase Expands cbBTC to Solana Network
Expanding its ecosystem, Coinbase introduced cbBTC on the Solana network as announced by Hassan Ahmed, Coinbase’s country director for Singapore, at the Breakpoint 2024 event. Ahmed highlighted the significant enthusiasm among users for Solana, stating, “We recently launched cbBTC on Base, but our users love Solana, and so do we. So we are very excited to announce that we will be bringing native cbBTC to Solana as well,” he shared.
Clarifying Coinbase’s Liability Terms for Bitcoin
On Sunday, Paul Grewal took to social media to confirm that Coinbase’s liability does not extend beyond the actual BTC lost. If Coinbase were to lose the Bitcoin supporting cbBTC, the company would only be responsible for compensating users based on the exact amount of BTC lost, not its equivalent value or any consequential losses. He emphasized this foundational principle: “We aren’t liable for more than the BTC we lose.”
This discourse on Coinbase’s custodial obligations concerning cbBTC, a wrapped version of Bitcoin, stresses the nature of the platform’s responsibility. Notably, losses stemming from loan liquidation collateralized by cbBTC due to an exploit are not covered under Coinbase’s liability terms. This clarification establishes a concrete understanding of Coinbase’s position on liability, ensuring users are clear about the risks and protection mechanisms involved.
Coinbase introduced Coinbase Wrapped Bitcoin (cbBTC) for users in various regions including the UK, Australia, Singapore, and the majority of U.S. states, excluding New York. This launch occurs against the backdrop of ongoing discussions about BitGo’s Wrapped Bitcoin (WBTC) and multi-jurisdictional custody agreements. BitGo’s recent decision to distribute custody across locations like Hong Kong, Singapore, and the U.S. has raised concerns about potential risk levels.
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