- The new Coinbase initiative will allow users to initiate the recovery process by providing their transaction ID and the inbound Coinbase wallet address.
- The introduction of Coinbase’s asset recovery tool highlights the ongoing challenges faced by cryptocurrency exchanges and users in retrieving lost assets.
In a major development, crypto exchange Coinbase announced that it will soon allow users to recover lost assets even for its unsupported blockchains such as Polygon or the BNB chain. As per the announcement on February 27, users who transferred assets to Coinbase accounts on the BNB Chain or Polygon network would only need to provide their transaction ID and the inbound Coinbase wallet address to initiate the recovery process for their assets.
For assets valued below $100, Coinbase does not impose any fees for recovery endeavors. However, reclaiming lost cryptocurrency exceeding that threshold will be subject to a 5% commission. The exchange added:
“Historically, these assets have been unrecoverable, in part because our employees and support channels don’t have access to the private keys needed to reverse these transactions”.
Coinbase has developed an in-house asset recovery tool utilizing proprietary technology. Customers seeking to recover their funds need to furnish two pieces of information: the transaction ID associated with the lost asset and the inbound Coinbase address with the misplaced asset. Coinbase’s tool seeks to alleviate some of these frustrations and streamline on-chain recovery processes to enhance the overall customer experience.
In contrast, Binance, Coinbase’s rival and the largest cryptocurrency exchange by trading volume, does not provide token recoveries. However, if a customer experiences a “significant loss” due to mistakenly depositing unlisted tokens, Binance may choose to assist in recovering those tokens at its sole discretion. It’s important to note that such recovery efforts do not come with a guarantee, as outlined on Binance’s website.
Cryptocurrency Exchanges’ Wallets Pose Challenges for Recovery
Cryptocurrency exchanges, akin to their regular users, commonly employ multisig wallets with built-in support for various blockchains and assets, even if these assets aren’t directly supported on the exchanges’ user interfaces due to regulatory considerations.
Although wrongly sent assets theoretically remain retrievable, the process often demands significant time, effort, and coordination, usually from high-ranking executives with control over exchange multisig wallets.
Notably, Coinbase’s recovery tool has successfully reclaimed a staggering $160 million worth of lost digital assets from the Ethereum blockchain since its inception. Presently, there are approximately 3,000 ERC-20 tokens mistakenly transferred to Coinbase via BNB Chain, along with 800 such tokens sent via Polygon, underlining the challenges associated with asset recovery in the cryptocurrency sphere. Crypto exchange Coinbase noted:
“We’re continuously investigating and expanding the scope of this feature to support additional assets and networks. Due to the technical complexities surrounding the recovery of unsupported assets, we can’t guarantee that any particular asset will be eligible in the future.”
Crypto exchange Coinbase has been also supporting other initiatives in the crypto space. As formerly reported by Crypto News Flash, Coinbase extended its support to Grayscale for converting its Ethereum Trust (ETHE) into a spot Ethereum ETF.
Besides, alike other crypto firms, Coinbase too has engaged in a legal battle with the U.S. Securities and Exchange Commission (SEC). Per Crypto News Flash’s earlier announcement, Coinbase has a 70% chance of winning the legal battle.
