Benzinga - February 26th, 2023 - The collapse of FTX cryptocurrency exchange left many users stranded and unable to access their funds. DeFi Insurance protocol InsurAce has stepped in to help victims, paying out over $40,000 to policy holders who purchased Custodian Risk Cover for FTX.
InsurAce provides protection against Smart Contract Risks, Stablecoin De-Peg Risks, IDO event Risk, and Custodian Risks. InsurAce had several active covers at the time of the FTX incident, totalling around $40,000 USD (or equivalent), which the company had anticipated would be claimable events. In an announcement made on November 11th, 2022, InsurAce confirmed that FTX had completely suspended all withdrawals for an unconfirmed duration, and policyholders were able to submit claims after 90 days had elapsed.
As per the terms of the policies held, policyholders were able to submit claims after 90 days had elapsed. Active cover holders of InsurAce's Custodian Risk Cover, were eligible to submit their claims over FTX’s suspension of withdrawals via the InsurAce dApp (app.insurace.io). Due to perceived difficulties over users proving their losses over the reported hack vs. asset withdrawals over Chapter 11 bankruptcy filings, and the alleged dangers of logging onto FTX, InsurAce believed it was easier for its cover holders to file a claim over the suspension of withdrawals.
InsurAce provided an evidence checklist for its cover holders, which contained a list of evidence required by the company to review their claims. The company advised all active cover holders to collect the necessary evidence as soon as possible and when it was safe to do so.
Withdrawals were halted for all FTX customers on November 8, 2022. In response, InsurAce began the claim settlement process to provide relief to affected users who had purchased their custodian risk covers. The process was extensive and required careful planning and execution to ensure that users were fairly compensated for their losses.
Following payouts to victims of $UST de-pegging in May 2022 and an exploit on Elephant Money in April 2022, this latest payout for victims of the FTX collapse clearly shows the need and usefulness of insurance in DeFi. InsurAce continues to lead in this space, consistently developing new and innovative products to protect users and make crypto safer for everyone.
InsurAce is proud to have supported policyholders during this difficult time and will continue to work tirelessly to provide protection to the DeFi community. For more information on InsurAce.io, please visit their website at https://insurace.io/.
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