Coinbase's Chief Legal Officer Responds to Concerns About cbBTC Terms of Service

ChainCatcher news, according to Cointelegraph, Coinbase's Chief Legal Officer Paul Grewal responded to the recent FUD surrounding the user service terms of Coinbase's newly launched "Bitcoin Wrapped" product cbBTC, confirming that if the exchange loses the underlying Bitcoin, Coinbase will fully compensate customers. This clarification came after concerns were raised about a troubling clause in the cbBTC user agreement, which stated that if Bitcoin is lost due to malicious activity or unforeseen events, Coinbase would not fully compensate customers but would allocate compensation based on the remaining Bitcoin.

In his statement, Paul Grewal confirmed that this policy limits the exchange's liability for external losses incurred due to complex trades and leveraged positions that customers may enter. For example, if a trader uses cbBTC as collateral on a lending platform and loses the underlying Bitcoin due to malicious activity leading to liquidation, Coinbase will fully compensate the lost Bitcoin but will not cover any costs or monetary losses incurred from the loan liquidation itself.