Coinbase will expand its Coinbase asset recovery tool to Polygon and BNB chains to allow users to recover lost assets sent to the platform’s unsupported blockchains.
Cryptocurrency exchange Coinbase has announced that users who have sent assets to blockchains not supported by Coinbase before will now get a chance to recover those assets if they provide the required information.
The exchange has also announced that for every retrieval request that is under $100, no fee will be charged. For every retrieval request that exceeds $100, there will be a 5% commission that the exchange will charge to facilitate the recovery process.
The exchange published a blog post on its website stating that it acknowledges the issue where some users mistakenly sent unsupported tokens like BNB Smart Chain to their Coinbase address, resulting in the loss of funds.
Historically, these assets were unrecoverable due to the lack of access to private keys. Coinbase upgraded its ERC-20 self-service asset recovery tool to address this issue and support retrieving assets on Ethereum, BNB Smart Chain, and Polygon.
The exchanges hope the effort will ease frustrations and provide a solution for users with locked assets. The statement regarding the unrecoverable aspect of these assets in the blog post read: “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.”
Like individual users, cryptocurrency exchanges utilize multisig wallets that automatically support various blockchains and assets, including tokens or networks that may not be displayed on the exchange’s interface due to regulatory compliance or other reasons.
Multisig wallets require multiple signatures to authorize transactions, providing added security. Each transaction needs approval from multiple parties, typically set by the wallet owner.
The Complexity of Recovering Mistakenly Sent Funds
Recovering mistakenly transferred assets in the crypto world is complex due to the irreversibility of transactions, lack of control over private keys, and blockchain immutability.
Additionally, regulatory constraints and compliance considerations limit exchanges’ actions. Coordination among multiple parties, including senders, recipients, and platform executives, is often necessary.
Transactions, once confirmed, are irreversible, complicating recovery efforts. Control over private keys is essential, as it is nearly impossible with transactions.
Regulatory requirements further hinder recovery options for exchanges and service providers. Overall, the decentralized nature of blockchain technology and compliance concerns contribute to the complexity of asset recovery processes.
It is also worth mentioning that crypto exchanges supporting recovering assets mistakenly sent charge a handsome fee.
In 2022, Cointelegraph published an article that mentioned how the Binance crypto exchange faced user backlash over increased retrieval fees for mistakenly sent cryptocurrencies.
The problem was raised in a Reddit ask-me-anything session where users complained about how much Binance charges to support recovery funds that were mistakenly sent to addresses not supported by the exchange.
One user reported that the fee, previously set to $30 for recovering funds, surged dramatically to 500 BUSD, drawing heavy criticism from Binance’s user base.
Binance defended the hike, citing the technical and operating efforts it took to complete this process, and promised that it would review its fee structure again.
Centralized exchange wallets require sender-recipient network address matching, complicating the recovery of assets sent to unsupported networks.
Binance’s earlier recovery fee was set at 0.001 Bitcoin, which equated to $40 at the time Cointelegraph published the report. Had this been the case today, and the fee remained fixed at 0.001 BTC, its value would be approximately $61.258 (depending on the Bitcoin value at the time of writing).
Some users defended the increase, arguing it reflected the cost of manual transfers. They cautioned against sending tokens on incompatible networks to avoid extra charges.
Since its establishment, Coinbase’s recovery tool has successfully recovered lost digital assets worth $160 million from the Ethereum blockchain. Approximately 3,000 ERC-20 tokens are mistakenly sent to Coinbase via BNB Chain, and 800 tokens are sent via Polygon.
Coinbase stated their ongoing efforts to enhance this feature, aiming to include more assets and networks. However, they cautioned that due to technical challenges, they cannot ensure the eligibility of specific assets for recovery in the future.
