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The vast majority of all digital assets are unprotected by insurance, warranty or other types of post-loss compensation at a time when crypto-related crime is rising by 60% year-over-year, a new report issued by CryptoLock.AI has found.
With hacks, scams, breaches and smart contract and security protocol exploits proliferating and growing more sophisticated, recovery of lost digital assets remains at just 5%, the report said.
“This dismal statistic is something that can change for the better, but it won’t happen until consumers understand what their options really are for protecting digital assets, and see that the insurance coverage offered today is not serving them well,” said Roger Ying, CEO of CryptoLock.ai.
“Crypto businesses that are insuring digital assets might not be reading the fine print on their policies. They might be unaware, for example, that recovery of stolen assets can take eight months or longer, or that if insurers do pay out a claim—which is extremely rare—they then take possession of the cryptocurrency that was recovered.”
There are a number of other barriers to the protection and recovery of lost digital assets that consumers are not fully aware of, he said, including:
- Premiums for crypto crime insurance are in the hundreds of thousands of dollars.
- Insurers require strong forensic evidence that can hold up in court or be deemed credible by the insurer. To gather this evidence, clients may need to invest in forensic investigations, which add significantly to the expense.
- Terms and conditions of some policies may have limitations or exclusions that can significantly affect coverage in the event of a loss event.
- Coverage limits for typical crypto crime policies can range from $1 million up to $20 million, depending on the provider and the insured's specific requirements. And crypto businesses need to be prepared to provide substantial evidence to prove the occurrence of hacking incidents, as insurers may be reluctant to pay out claims without clear proof of criminal activity. This burden of proof can be daunting for businesses, making this type of insurance less accessible for some.
But the landscape is changing, and consumers now have more choices when it comes to safeguarding and recovering their assets.
Customizable insurance technology platforms are being developed that can be tailored to the specific needs of businesses and users, and can integrate with legacy workflow technologies to offer full-stack solutions, essentially digitizing and integrating insurance products on the market.
“Both technology and human expertise are critical in asset recovery,” said Stewart Bell of Moxy.io. “Forensic accounting, cybersecurity, and blockchain expertise are required to trace and recover digital assets. Unique services like CryptoLock.ai streamline these elite services for forensic reporting on breaches and losses that can stand up in court, and offer membership to a network of litigators and investigators that can trace lost assets, freeze accounts, and file injunctions. This goes way beyond the other insurance solutions that are on the market today, and we want our users to have the peace of mind that only this model provides.”
To download a copy of CryptoLock.ai’s Q2 2023 Crypto Insurance Report, click HERE.
About CryptoLock
Cryptolock.ai is an innovative membership program that enables users to save up to 90% of compliance and recovery expenses in case of a crypto breach. CryptoLock was developed in collaboration with cyber insurers through PolicyDock.com's no-code insurance platform, and it simplifies the process of recovering crypto due to any loss event. The company helps connect users with global crypto recovery experts who are fully equipped to investigate lost crypto and win back funds legally. CryptoLock’s membership subscription offers access to a range of services to offer users maximum protection, including: Blockchain Analytics, Cyber Forensics, Private Investigations, Asset Recovery, Wallet blacklisting & freezing, Global Litigation, Litigation Funding and much more.
Disclaimer
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