With increasing cases of hacking being reported in cryptocurrency exchanges around the world and to safeguard the interest and instil confidence of investors, Coinbase has taken a definitive step.
The exchange has confirmed that it has taken a $255 million insurance for its crypto holdings in its hot wallet through Lloyd’s of London. Coinbase’s president of security, Phillip Martin said that they want to give users the certainty of their assets being safe in case of a security breach.
Coinbase already covered their customer’s fiat deposit and now extending it to customer’s crypto holding is a step forward, in this highly uncertain industry. Martin issued a statement, noting:
“We currently hold 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.”
Llyods is an insurance giant with almost 333 years of history and carries the power to pool multiple finance backers to spread risk. Coinbase had first secured insurance policy in 2013 through AON. This latest act by Coinbase to secure its crypto holdings in the hot wallet will allow the exchange to reduce the risk of investing in cryptocurrencies.
“Significant programs like ours, especially in emerging areas of risk, are generally put together using a large number of insurance companies who each take positions of loss in a ‘tower’. If a loss occurs, insurers at the lower layers of the tower would pay first, followed by those in higher layers.”
A few days back, South Korea’s leading crypto exchange Bithumb‘s system was breached for the second time in the past twelve months, losing $19 mn worth of cryptocurrencies. Also, New Zealand’s based Cryptopia’s account breach and QuadrigaCX’s saga has eroded much confidence of the investors from the crypto space.
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