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Were FTX Funds Insured? Understanding FTX Insurance Amidst Bankruptcy

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cryptomarketupdate
Were FTX Funds Insured? Understanding FTX Insurance Amidst Bankruptcy

The FTX crash landed thousands of its customers in dismay with billions of funds either lost or hacked only in a matter of the last few days. This has impacted global cryptocurrency prices, pushing some of the crypto tokens to their all-time lows. Amidst this crisis, the question of security and reliability in crypto has again become a major point of discussion. 

Even after being considered one of the safest crypto ecosystems in the world, FTX’s total value turned into dust within hours. And this is what raises questions about the authority of the crypto as a trustable asset and the security mechanisms promoting its expansion.

One such security mechanism used by exchanges is Crypto Insurance. The mechanism is designed to back up the funds in case of any forgery, hacks, leaks, or other calamities. These insurances are used to build trust amongst customers, providing them the relief that their funds are secured even if anything goes wrong. 

Did FTX Have an Insurance?

After reading about crypto-insurance, it is obvious for you to wonder whether FTX had insured its assets with any crypto-insurance company. However, none of us can access the ‘Security and Insurance’ section of the exchange’s website as it has ceased to load.

As per the reports of the Insurance Journal, FTX held insurance for the cryptos stored in its hot wallets with a limit of $7.5 million. This insurance was inadequate in all aspects to cover the losses of its users in worst-case scenarios. Apart from that, the Insurance Journal also reported that FTX has delegated its funds to BitGo, a digital asset trust and security company, to provide custody and insurance.


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