Coinbase Chief Legal Officer Paul Grewal clarified the company’s liability if it loses any of the Bitcoin (BTC) backing its newly debuted Coinbase Wrapped Bitcoin (cbBTC) is strictly limited to the actual amount of BTC lost.

The clarification from Grewal also emphasized the custodial relationship Coinbase holds with its users. Under Coinbase's terms, if any BTC is lost due to internal issues or an exploit, the platform is only responsible for returning a proportional share of the remaining BTC, not its full value or any additional losses users may incur.

Grewal’s clarification comes at a time when Coinbase is expanding the reach of cbBTC. At the Breakpoint 2024 event last week, Hassan Ahmed, Coinbase's country director for Singapore, announced plans to bring cbBTC to the Solana network.

"We recently launched cbBTC on Base, but our users love Solana, and so do we. So we are very excited to announce that we will be bringing native cbBTC to Solana as well," Ahmed told the audience.

Meanwhile, Grewal confirmed Sunday that the exchange’s liability does not extend beyond any lost BTC itself.

He was asked for clarification on Coinbase’s custodial obligations regarding cbBTC, a wrapped version of Bitcoin issued by the platform. The question implied that if Coinbase were to lose the BTC backing cbBTC, the company would only be responsible for compensating users on a per-BTC basis.

Losses incurred from the liquidation of a loan collateralized by cbBTC in the event of an exploit, would not be covered. Grewal confirmed this interpretation, adding: “It’s a limitation on liability that’s pretty basic: we aren't liable for more than the BTC we lose.”

Coinbase launched its tokenized version of Bitcoin earlier this month for users in the UK, Australia, Singapore, and all U.S. states except New York.

The release coincided with controversy surrounding BitGo's Wrapped Bitcoin (WBTC) and Tron founder Justin Sun's role in the project. Earlier, on August 9, BitGo revealed plans to distribute custody of the Bitcoin backing WBTC across multiple locations, including Hong Kong, Singapore, and the U.S., through a multi-jurisdictional agreement.

The news was met with worries that the change could introduce “an unacceptable level of risk.”

Edited by Stacy Elliott.

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