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Cryptocurrency News Articles
Coinbase Clarifies cbBTC User Terms After FUD Highlights Potential Loss of Funds
Sep 23, 2024 at 03:34 am
Coinbase chief legal officer Paul Grewal responded to recent fear, uncertainty, and doubt (FUD) surrounding the user terms of service for Coinbase's
Coinbase chief legal officer Paul Grewal has addressed recent fears over a clause in the user terms of service for Coinbase's new cbBTC product.
The clause in question states that Coinbase will not reimburse customers the full amount of Bitcoin lost due to malicious activity or unforeseen events, but will instead give clients a “proportional share of whatever BTC is left.”
However, Grewal clarified the policy in a statement to Cointelegraph's Alex O'Donell, emphasizing that the provision limits the exchange's liabilities from external losses arising from complex trades and leveraged positions clients may enter.
For example, traders who use the cbBTC as loan collateral on lending platforms and experience a liquidation following the loss of the underlying Bitcoin due to malicious activity would be fully reimbursed for the Bitcoin lost by Coinbase but would not recoup any fees or monetary losses resulting from the loan liquidation itself.
Coinbase launched cbBTC, a tokenized or wrapped version of Bitcoin, on Sept. 12 for residents in the United Kingdom, Australia, Singapore, and all US states except New York.
The announcement came amid controversy surrounding BitGo's Wrapped Bitcoin (WBTC) product and Tron Founder Justin Sun's involvement in the project.
On August 9, BitGo announced it was entering into a multi-jurisdiction agreement that would see its asset custody locations for the underlying Bitcoin split between Hong Kong, Singapore, and the United States.
Following the widespread concerns about Sun's involvement in the project, BitGo CEO Mike Belsche reassured the crypto community that Sun wouldn't have the ability to move funds.
Since then, the Sky — formerly known as Maker — community voted to drop WBTC from the platform in a governance vote, and Coinbase's cbBTC has surged in popularity to become the third-largest wrapped BTC token in only one week.
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