Coinbase Chief Legal Officer Responds to cbBTC Terms of Service FUD: If the Exchange Loses the Base Bitcoin, It Will Fully Compensate Users

Odaily Odaily News: Paul Grewal, Chief Legal Officer of Coinbase, responded to the recent FUD surrounding the user terms of service of Coinbase's new "Bitcoin wrapper" product cbBTC. He confirmed that if the exchange loses the underlying Bitcoin, Coinbase will fully compensate customers. Previously, it was pointed out that there was a worrying clause in the cbBTC user agreement, which stated that if Bitcoin is lost due to malicious activity or unforeseen events, Coinbase will not fully compensate customers, but will distribute it to customers in proportion to the remaining Bitcoin. Grewal confirmed in the statement that the policy limits the exchange's liability for external losses caused by complex transactions and leveraged positions that customers may enter. For example, if a trader uses cbBTC as collateral on a lending platform and is liquidated due to the loss of underlying Bitcoins due to malicious activity, Coinbase will fully compensate for the lost Bitcoins, but will not compensate for any fees or capital losses incurred due to the loan liquidation itself. (Cointelegraph)