Coinbase has submitted an amicus brief in the ongoing bankruptcy case of Prime Trust, urging the court to uphold legal protections for customer assets held by custodians. Paul Grewal, Coinbase’s Chief Legal Officer, announced the filing on social media, emphasizing that customer assets should not be absorbed into a custodian’s bankruptcy proceedings.
Coinbase Urges Court to Uphold Customer Asset Rights
In a recent post on X, Paul Grewal stated that Coinbase filed an amicus brief in the Prime Trust bankruptcy case. The company is advocating for the enforcement of Uniform Commercial Code (UCC) Article 8, which ensures that assets held by custodians belong to customers and not the custodians themselves.
Coinbase argues that both its user agreement and Prime Trust’s user agreement explicitly state that assets remain customer property. The company asserts that bankruptcy should not alter these agreements or reclassify assets as part of the custodian’s estate.
The legal filing will prevent customer funds from being included in Prime Trust’s bankruptcy estate. Coinbase maintains that upholding UCC Article 8 is essential to maintaining trust in custodians, both in digital and traditional finance.
In other legal developments, the Operation Chokepoint 2.0 hearing is drawing industry-wide attention. Coinbase CLO Paul Grewal will testify alongside other key figures, pushing back against alleged unfair banking restrictions on crypto.
Legal Protections Under UCC Article 8
UCC Article 8 is a fundamental part of commercial law that protects customer assets held by custodians. It applies to both digital and traditional financial institutions, ensuring that customer funds remain separate from a custodian’s bankruptcy proceedings.
Coinbase emphasized that this legal framework applies to major financial institutions, including Bank of New York (BNY) and Depository Trust Company (DTC). The company stated that courts have historically upheld these protections to ensure market stability and customer security.
The amicus brief argues that disregarding UCC Article 8 could set a negative precedent for customer asset protections. Coinbase believes that recognizing customer ownership of assets is critical for preserving market confidence and protecting investor funds.
Trust and Security in Financial Markets
Coinbase has positioned itself as a strong advocate for customer asset protection in financial markets. The company stated that ensuring customer funds remain secure is essential for maintaining trust in custodians and financial institutions.
Paul Grewal expressed confidence in the legal precedent supporting customer asset protections. He urged the court to reinforce these protections in the Prime Trust bankruptcy case, aligning with past court rulings that have upheld UCC Article 8.
The company emphasized that its filing is not about crypto only but about broader financial principles that impact digital and traditional finance.
In addition, the top crypto exchange continues to strengthen its global footprint with regulatory approvals in key markets. Coinbase recently secured a VASP license in the UK, allowing it to offer expanded crypto and fiat services. This move aligns with its broader international strategy, ensuring compliance while driving digital asset adoption.
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