Coinbase Chief Legal Officer Paul Grewal stated that the company's liability for losing Bitcoin (BTC) supporting its new Coinbase Wrapped Bitcoin (cbBTC) is limited to the amount lost.
Grewal also stressed Coinbase's custodial relationship with users. If BTC is lost due to internal flaws or an exploit, Coinbase will repay a proportional share, not its entire value or any further losses.
Grewal's clarification comes as Coinbase expands cbBTC. Last week at Breakpoint 2024, Coinbase's Singapore country director Hassan Ahmed announced intentions to add cbBTC to Solana.
We recently introduced cbBTC on Base, but our users and we enjoy Solana. Solana will get native cbBTC, which we are delighted about "Ahmed addressed the audience.
Grewal said Sunday that the exchange's liability is limited to lost BTC. He was asked about Coinbase's custodial duties for cbBTC, a wrapped Bitcoin. The question implies that Coinbase would only compensate users per BTC if it lost the BTC supporting cbBTC.
In the event of an exploit, cbBTC loan liquidation losses are not compensated. Grewal added, “It's a limitation on liability that's pretty basic: we aren't liable for more than the BTC we lose.”
Coinbase debuted its tokenized Bitcoin this month in the UK, Australia, Singapore, and all U.S. states except New York.
This release coincides with controversies regarding BitGo's Wrapped Bitcoin (WBTC) and Tron creator Justin Sun's involvement. On August 9, BitGo announced a multi-jurisdictional arrangement to divide custody of WBTC's Bitcoin to Hong Kong, Singapore, and the U.S.