Gemini Trust is the digital asset exchange founded by the Winklevoss twins of Facebook fame. Today the company announced that Aon arranged insurance cover for custodied digital assets. According to Gemini, the un-named carriers are a global consortium of leading insurers.
The company says they were able to demonstrate to underwriters that the company is a “leading, best-in-class exchange and custodian.”
“Consumers are looking for the same levels of insured protection they’re used to being afforded by traditional financial institutions,” said Yusuf Hussain, Gemini’s Head of Risk. “Educating our insurers not only allows us to provide such protections to our customers, but it also sets the expectation for consumer protection across the crypto industry.”
A few months ago, the topic came up at the Blockchain for Insurance summit. One broker commented that coverage was possible, but the price was often prohibitive.
And for a good reason. While Bitcoin itself has never been hacked to date, numerous exchanges have been breached. And the losses are usually substantial.
So far this year the largest hacks were at the following exchanges: Coincheck ($530m), BitGrail ($195m), Coinrail ($40m), and Bithumb ($31m).
As much as Gemini wants to protect customers, cryptocurrencies carry inherent risks beyond exchanges being hacked. This was demonstrated by the severe Bitcoin bugs resolved last month. One of the bugs would have allowed malicious miners to create Bitcoins for themselves. Although some dispute the severity of the problem. In this particular case Bitcoin owners would not have lost coins directly, but it might have had an impact on the price.