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Paul Grewal, the Chief Legal Officer of Coinbase, has responded to recent worries over the terms of service of the newly introduced cbBTC “wrapped Bitcoin” product. Grewal verified that should malicious conduct or unanticipated occurrences cause the exchange to lose the underlying Bitcoin, Coinbase will completely refund customers.
The explanation followed a user’s questions concerning a clause in the cbBTC user agreement, alleging it indicated Coinbase may only repay a proportionate piece of the remaining Bitcoin instead of the whole lost. Grewal reassured me that losses of the underlying Bitcoin owned by Coinbase are not covered by this policy; it only applies in particular circumstances, such complicated trades or leveraged holdings.
For instance, Coinbase would completely compensate lost Bitcoin should a trader utilize cbBTC as loan collateral on lending sites and the underlying Bitcoin is lost. Any fees or damages suffered from loan liquidations resulting from the loss would not be reimbursed, nevertheless.
Launching cbBTC on September 12, Coinbase targets consumers in the United Kingdom, Australia, Singapore, all US states except New York. This release coincided with continuous debate about BitGo’s Wrapped Bitcoin (WBTC) product and Tron Founder Justin Sun’s participation in that endeavour.
BitGo revealed on August 9 a multi-jurisdictional custody agreement dividing the asset custody sites for the underlying Bitcoin among Hong Kong, Singapore, and the United States. Reassurance from BitGo CEO Mike Belsche, who explained Sun would not have authority over the money, came from worries regarding Sun’s influence over the initiative.
Following these issues, the Sky (previously Maker) community opted to remove WBTC off their platform. Concurrently, Coinbase’s cbBTC has become rather well-known and ranks third among all the wrapped BTC tokens in just one week.
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