The post Coinbase Chief Legal Officer Clarifies cbBTC User Agreement Concerns appeared on BitcoinEthereumNews.com.

Paul Grewal has addressed recent concerns regarding the terms of service for Coinbase’s newly launched cbBTC, a wrapped Bitcoin product. The concerns arose after claims suggested that the exchange would not fully reimburse users for Bitcoin lost due to malicious activity or unforeseen events. Limited Liability Concerns The issue was first raised by an X user who highlighted what they believed to be a problematic part of the cbBTC user agreement. The individual argued that this provision would limit Coinbase’s legal liability, claiming that they would only reimburse clients with a “proportional share of whatever BTC is left” rather than the full amount in cases where Bitcoin was lost. Journalist Alex O’Donnell added context, explaining that the crypto exchange would owe cbBTC holders for lost Bitcoin on a per-BTC basis but would not cover any additional losses. For example, if a user holding it as loan collateral experienced a liquidation due to lost Bitcoin, they would be reimbursed for the lost crypto but not for any related fees or losses from the liquidation. Paul Grewal responded, confirming that the liability is limited to the Bitcoin lost and does not extend to covering external losses from trades or leveraged positions. “It’s a limitation on liability that’s pretty basic: we aren’t liable for more than the BTC we lose. This language also makes clear the custodial relationship,” he said. Brian Armstrong also recently addressed rising community skepticism over the product’s transparency, confirming that cbBTC is backed by Coinbase itself. WBTC Controversy On September 12, Coinbase launched cbBTC, a tokenized or wrapped version of Bitcoin. The launch coincided with controversy surrounding BitGo’s Wrapped Bitcoin (WBTC), which has gotten attention due to Tron founder Justin Sun’s involvement. Within a week of its launch, cbBTC became the third-largest wrapped Bitcoin product in a segment dominated…

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Filed under: News - @ September 23, 2024 2:27 pm