*Updated on March 24, 2023, after the full payout.
Web3 is not without risks. It is well-documented that there have been hacks, exploits, scams, rug pulls, and liquidations on a regular basis since the inception of the industry over a decade ago. These risks have seen the emergence of DeFi Insurance protocols like InsurAce.io. InsurAce protects against Smart Contract Risks, Stablecoin De-Peg Risks, IDO Event Risks, and Custodian Risks.
Famously, InsurAce has paid out almost $12Million to 155 victims of the $UST de-peg event following the collapse of the Terra Blockchain.
Previously, InsurAce paid out almost $100k to victims of an exploit of Elephant Money.
Even these examples, and many more like them, are vastly overshadowed by the recent collapse of the FTX cryptocurrency exchange.
This is how InsurAce came to the rescue of 4 policy holders and FTX users who lost funds in the recent FTX downfall.
Let’s go back to when the incident first happened:
Following FTX’s recent Chapter 11 filing for bankruptcy on November 11th, 2022, and news of unauthorized transactions, here is the InsurAce review of the FTX saga.
At the time of the events, InsurAce had 4 active covers, totaling around $40,000 USD (or equivalent), which we had anticipated would be claimable events.
We made an announcement on November 11th, 2022 to confirm that FTX had completely suspended all withdrawals for an unconfirmed duration.
As per the terms of the policies held, policyholders were able to submit claims after 90 days had elapsed.
Active cover holders of our Custodian Risk Cover purchased before November 1st, 2022, were eligible to submit their claims over FTX’s suspension of withdrawals before the expiration of the earlier of 21 days after InsurAce had publicly confirmed the 90 days had elapsed or 15 days after the cover period had expired.
We will also make another announcement 120 days from November 11th, 2022 (i.e. on March 11th, 2023) to confirm that FTX had completely suspended all withdrawals of all users’ cryptocurrency assets without prior notice for a continuous period of 120 days or more where such suspension of withdrawals first occurred during the cover period. Upon publicly confirming the above, active cover holders of our Custodian Risk Cover purchased on or after November 1st, 2022, will be eligible to file their claims for 21 days after this date.
Regarding recent news over unauthorized transactions of users’ funds from FTX, we were aware of a public announcement that FTX had been hacked, as reported here on November 12th, 2022, which stated:
“FTX has been hacked. FTX apps are malware. Delete them. Chat is open. Don’t go on FTX site as it might download Trojans,” wrote an account administrator in the FTX Support Telegram chat. The message was pinned by FTX General Counsel Ryne Miller.”
We were also aware of FTX US General Counsel Ryne Miller’s announcement, as reported here on November 12th, 2022, that:
“Following the Chapter 11 bankruptcy filings – FTX US and FTX [dot] com initiated precautionary steps to move all digital assets to cold storage,” Miller said. “Process was expedited this evening – to mitigate damage upon observing unauthorized transactions.”
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, we believed it was easier for our cover holders to file a claim over the suspension of withdrawals.
We provided an evidence checklist for our cover holders, which contained a list of evidence required by InsurAce in order to review their claims. We advised all active cover holders to collect the necessary evidence as soon as possible and when it was safe to do so.
We thank our cover holders for choosing InsurAce and for their continued support during this difficult time.
How we responded to the incident:
Withdrawals were halted for all FTX customers on November 8, 2022, leaving many users stranded and unable to access their funds. In response, we began the claim settlement process to provide relief to affected users who have purchased out custodian risk covers. The process was extensive and required careful planning and execution to ensure that users were fairly compensated for their losses.
If the users were holding an active cover on 11th November 2022, they are eligible to file a claim for reimbursement. The process is being managed entirely by InsurAce .
The timeline for filing claims depends on when the cover was purchased. For covers purchased before 1st November 2022, the filing window is from 9th Feb, 2023 to 1st Mar, 2023 23:59:59 GMT+8. For covers purchased after 1st November 2022, the filing window is from 11th Mar, 2023 to 31st Mar, 2023 23:59:59 GMT+8.
The claims process is divided into batches, and each batch has a voting period. During the voting period, holders of the custodian risk cover can vote on the validity of the claim. If the claim is approved, a payout is made to the claimant.
For the first batch of claims, the voting period was from 2023/02/17 21:00:00 to 2023/02/19 21:00:00 GMT+8.
Two claims were submitted, and both were approved. The payout amount for the first batch was $16,839.14.
For the second batch of claims, we announced the voting on March 16th:
One claim was submitted, and approved. The payout amount for the first batch was 20,000 MATIC.
List of cover holders eligible to file claim:
|Cover Start Time (GMT+0)
|Cover End Time (GMT+0)
** Since FTX Japan KK has announced to return of assets to its customers, FTX Japan customers are not eligible to make claims. Kindly follow the instructions in the article below to request the withdrawal via Liquid Japan:
FTX Claim Settlement Process:
On November 8, 2022, InsurAce was notified that withdrawals were halted for FTX International customers. On November 11, 2022, the withdrawal halt was confirmed to be effective for all FTX customers. In response, InsurAce offered a custodian risk cover to protect users’ funds and announced the claim filing timeline on November 14, 2022.
InsurAce continued to update users on the claim filing process. On February 6, 2023, guidelines for users were provided, including the claim submission timeline, required proof of loss, and other important information. On February 8, 2023, InsurAce extended the claim filing deadline and prepared the claim data excel sheet.
Finally, on February 9, 2023, InsurAce announced that the claim filing was open. Users were able to submit their claims until the filing window closed on either February 28, 2023, or March 31, 2023, depending on when their custodian risk cover was purchased.
On February 13, 2023, InsurAce began reviewing the claims submitted and writing the investigation report. On February 16, 2023, the investigation report was uploaded, and the group claim was submitted to the claim portal. Related individual claims were added, and the claim status was switched.
From February 17 to February 19, 2023, the group voting period took place. During this time, holders of the custodian risk cover voted on the validity of the claims. The group voting period lasted 48 hours and resulted in all claims being accepted.
From February 19 to February 22, 2023, the individual appeal period took place. However, no appeals were made. Finally, on February 22, 2023, InsurAce made the payout to the claimants.
Here is the simplified chart for the claim process:
|November 8, 2022
|Notified of the withdrawal halt for FTX international
|November 11, 2022
|Confirmed the withdrawal was completely halted for all FTX customers
|November 14, 2022
|Make announcements to address the incident and inform users of the claim filing timeline. FTX Collapse – Cover Holder & Community Update – InsurAce.io Blog
|February 6, 2023
|Provide guidelines for users on the upcoming claim filing with details on the claim submission timeline, the proof of loss required and other things users should prepare before filing the claim. Guidelines for FTX Custodian Cover Claim Filing – InsurAce.io Blog
|February 9, 2023
|Make announcements to inform users that claim filing is open. InsurAce.io Protocol on Twitter
|February 16, 2023
|Make announcements on the voting: date, process and steps required for voters. 📣InsurAce.io Announcement Channel
|February 17, 2023, to February 19, 2023
|Group Voting: 48hrsResult: Accepted
|February 22, 2023
|Make 1st batch payout
|March 16, 2023
|2nd Batch voting announcement
|March 24, 2023
Glad to see our user’s happy face (virtually):
What we’ve learned:
The recent events surrounding FTX have been challenging for everyone involved in the crypto industry.
However, as a responsible player in this space, InsurAce is committed to ensuring the best outcome for our users.
The InsurAce FTX claim settlement process was thorough and transparent. InsurAce kept users updated throughout the entire process, from announcing the claim filing timeline to making the payout.
If you were affected by the FTX withdrawal halt and held an active custodian risk cover, InsurAce provided a solution and ensured that the claims process was handled in a fair and timely manner.
We strive to always act with transparency, honesty, and integrity. Our approach to handling the situation with FTX demonstrates this commitment. We will continue to provide updates as new information becomes available and work to improve our products and services to meet the evolving needs of our community.
Thank you for choosing InsurAce and entrusting us with your assets.
November 14, 2022: FTX Collapse – Cover Holder & Community Update – InsurAce.io Blog
February 6, 2023: Guidelines for FTX Custodian Cover Claim Filing – InsurAce.io Blog
February 16, 2023: Voting details 📣InsurAce.io Announcement Channel
February 17, 2023: Reminder on staking deadline 📣InsurAce.io Announcement Channel
InsurAce is a leading decentralised insurance protocol, providing reliable, robust and secure insurance services to DeFi users, allowing them to secure their investment funds against various risks. Being the 1st in the industry to offer cross-chain portfolio-based covers, InsurAce enables users to get unbeatable low premiums.
InsurAce has been live since April 2021 and has built a full-spectrum cross-chain insurance product line, covering Smart Contract Vulnerabilities, Stablecoin De-Peg events, IDO risks, and Custodian Risks… protecting over $350m of assets of 5000+ customers!
Join the InsurAce community:
Read More about InsurAce: https://www.insurace.io/blog