Today GK8, the digital asset wallet provider, announced that it secured an insurance policy from an Arch Underwriting Lloyds syndicate via broker Aon UK. The cold wallet coverage could be up to $500 million (per customer according to GK8).
Earlier this year, the company enticed hackers to break their wallet for a bounty of $250,000, but none were successful. Its wallet solution is already in action with the likes of eToro. The cold wallet or offline wallet allows only one way connectivity from the wallet to the internet, so attackers cannot access the wallet. It also has an MPC (multi party computation) hot wallet.
“The cold wallet, which only transmits data and therefore (is) totally unhackable, protects the vast majority of the transaction, while the MPC wallet protects the rest,” said GK8 in its announcement. “This means a hacker would have to invest much more in breaking into the MPC wallet than they could ever gain from stealing from it. GK8’s solution therefore enables hot-wallet functionalities through its MPC, all while leveraging the security standard of the fully hack-proof cold wallet.”
GK8 also claims the premiums are low because of the low risk. Generally, cold wallet insurance is much cheaper than hot wallet insurance.
The company provides an on-site digital asset custody system, which it says enables financial institutions to get high access to digital assets. Leading Israeli cybersecurity experts founded and advise the company. For example, the former head of Israeli intelligence cybersecurity, Ilan Levanon, is an adviser.
But there is a caveat on the insurance. The clients have to comply with security recommendations.
“We have worked hard to demonstrate the validity of GK8’s solution to insurers so that the company’s clients can benefit from pre-negotiated insurance coverage to protect the digital assets in their care, custody, or control,” says Tom Davis, Client Director of Aon UK Ltd.
In the last year or so, the availability of insurance coverage for digital assets has increased significantly. And both Arch and Aon have been very active. It brokered hot wallet insurance for Coinbase to the tune of $255 million and a similar kind of cover for the Gemini Trust (Winklevoss twins). Plus, it has secured coverage for multiple specialist custody solutions with big name backers, including Trustology (Two Sigma, ConsenSys), Anchorage (Visa, Andreessen Horowitz) and METACO (Swisscom).
Update: GK8 says the coverage is up to $500 million per wallet. We previously stated in aggregate.