Crypto insurance sounds reassuring until software fails. Who gets paid, how much, and in Bitcoin or dollars can all differ.
- A software flaw at Liquid allowed the creation of L-BTC without corresponding Bitcoin backing, leading to a loss of nearly 4,000 BTC from its reserve.
- Crypto insurance policies may not guarantee full customer reimbursement, with coverage varying based on the nature of the loss and policy terms.
- The article highlights the complexities of compensation, particularly when payouts are calculated in dollars rather than the original cryptocurrency, and emphasizes the need for clear communication from service providers regarding their financial protection.
Topics: Risk default, Infrastructure providers, Compliance, Smart contract vulnerabilities, Custody security solutions, Aml antimoneylaundering
Tags: #bitcoin #cryptoinsurance #softwarefailure #privatekeys #liquid #lbtc #reimbursement #dollaramount #assetprotection #smartcontracts