“We recently launched cbBTC on Base, but our users love Solana, and so do we,” said Hassan Ahmed, Coinbase’s country director for Singapore.
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Paul Grewal, the Chief Legal Officer of Coinbase, provided important insights regarding the company’s liability in the event of a loss of Bitcoin (BTC) associated with the newly launched Coinbase Wrapped Bitcoin (cbBTC). He stated that the company’s responsibility is strictly confined to the actual quantity of BTC that is lost, thereby delineating the extent of their financial obligation.
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In his remarks, Grewal underscored the nature of the custodial relationship that Coinbase maintains with its users. According to the terms set forth by Coinbase, should any BTC be lost due to internal complications or security breaches, the platform’s obligation is limited to reimbursing a proportional share of the remaining BTC. This means that users will not receive the full value of their lost assets or compensation for any additional losses they may experience.
This clarification from Grewal is particularly pertinent as Coinbase seeks to broaden the availability of cbBTC. During the Breakpoint 2024 event held last week, Hassan Ahmed, the country director for Coinbase in Singapore, revealed intentions to integrate cbBTC with the Solana network, marking a significant step in the platform’s expansion strategy.
Ahmed addressed the audience with enthusiasm, stating, “We have recently introduced cbBTC on the Base platform, and while our users have shown a strong preference for Solana, we share that sentiment. Therefore, we are thrilled to announce that we will be launching native cbBTC on the Solana network as well.”
In a separate statement on Sunday, Grewal clarified that the exchange’s responsibility is limited solely to the lost Bitcoin itself. This clarification was made in response to inquiries regarding Coinbase’s custodial duties concerning cbBTC, which is a wrapped version of Bitcoin provided by the platform.
The inquiry raised concerns about the extent of Coinbase’s obligations should the BTC backing cbBTC be lost. Grewal indicated that in such an event, the company would only be liable to reimburse users based on the amount of Bitcoin lost, rather than any additional compensation.
In the event of an exploit, any losses resulting from the liquidation of a loan secured by cbBTC will not be compensated. Grewal affirmed this understanding, stating, “This represents a fundamental limitation of liability: our responsibility does not extend beyond the amount of BTC that we lose.”
Earlier this month, Coinbase introduced its tokenized version of Bitcoin, making it available to users in the United Kingdom, Australia, Singapore, and all U.S. states with the exception of New York. This launch marks a significant development in the cryptocurrency market, expanding access to a broader audience while enhancing the platform’s offerings.
The timing of this release has sparked discussions, particularly in light of the ongoing controversy surrounding BitGo’s Wrapped Bitcoin (WBTC) and the involvement of Tron founder Justin Sun in the initiative. On August 9, BitGo announced its intention to diversify the custody of the Bitcoin that underpins WBTC across various locations, including Hong Kong, Singapore, and the United States, through a multi-jurisdictional framework.
This announcement has raised concerns among stakeholders, as there are apprehensions that such changes could lead to an “unacceptable level of risk.” The implications of these developments are being closely monitored, as they may influence the stability and security of tokenized assets in the cryptocurrency ecosystem.
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