Coinbase Chief Legal Officer Paul Grewal has responded to recent FUD surrounding the user terms of service for Coinbase’s new “Bitcoin wrapper” product, cbBTC, by confirming that Coinbase will fully reimburse customers if the exchange loses the underlying Bitcoin.
Previously, a worrying clause in the cbBTC user agreement was pointed out, which states that if Bitcoin is lost due to malicious activity or unforeseen events, Coinbase will not fully reimburse customers, but will instead distribute it to customers in proportion to the remaining Bitcoin.
In his statement, Grewal confirmed that the policy limits the exchange’s liability for external losses arising from complex trades 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 malicious activity resulting in the loss of underlying Bitcoin, Coinbase will fully reimburse the lost Bitcoin, but will not compensate for any fees or funds lost due to the loan liquidation itself. (Cointelegraph)