Most, if not all crypto users are concerned about the possibility of their funds being stolen, and for good reason.
The recent hack of exchanges such as DragonEx and Cryptoia led to the loss of millions of dollars of customers’ crypto holdings. On top of this, a number of vulnerabilities have been exposed in wallets such as the Trezor wallet which means that user funds still have a chance of going missing.
Between all these and the still-unfolding QuadrigaCx Story, cryptopians around the world often seek some assurance that their funds are safe. On April 2, 2019, Coinbase’s Chief Information Security Officer (CISO) Philip Martin gave users some of this assurance by announcing that Coinbase now offers insurance for some of the funds in their hot wallets.
Safe and Secure
The post went on to detail that Coinbase has coverage for up to $225 million of the funds that are kept in their hot Wallet. The insurance in question is being provided by a Lloyd’s, a London-based broker.
Although this is only being hashed out as of late, the insurance policy has been in place since 2013 to guard against theft via hacking, which is acknowledged as one of the most significant risks that a crypto exchange is exposed to.
“[A] hot wallet policy with a $255 million limit placed by Lloyd’s registered broker Aon and sourced from a global group of US and UK insurance companies, including certain Lloyd’s of London syndicates,” the post states.
While Lloyd’s of London isn’t an insurance broker in itself, it acts as an instance marketplace where multiple brokers pool together and share the risks.
The post also explains the two insurance classes that are available to an exchange: Crime and Specie marketplaces.
The Crime marketplaces give coverage for any funds that are lost by way of hacking and theft, which is relatively common in the industry. Specie marketplaces offer coverage for the loss or damage to private keys. The post outlines that while Crime marketplaces give insurance for the funds that are in transit, Specie marketplace gives insurance for funds that are at rest.