Coinbase Insured

[allgoodthings1]

http://blog.coinbase.com/post/95927658922/coinbase-insured

[bitcoinstarter]

http://blog.coinbase.com/post/95927658922/coinbase-insured

About time ?

[cypherdoc]

well that's good news.

[allgoodthings1]

About time we knew, I guess that is.  It's been a knowable circumstance for a long time. Just not widely known, I guess.

[kokojie]

Old news, coinbase has been insured for over a year...

[juju]

Thats great they insure coins but what if someone logs into your account and buys 10btc from your Bank transfer and sends it off? Your out 5000$?

Coinbase has security steps in place to prevent this from happening to a user if they protect themselves. You can setup 2-Factor Authentication for Buys/logins/api key creations + Email notifications, I think I read in one blog post that you could even have your coinbase buys go directly to your multisig "coinbase vault" after the waiting period.

Any buys on coinbase over 1000USD are not instantaneous, a 10btc buy on coinbase most likely you can get them too cancel the pending order if you inform them you were hacked and provide details etc. The reason they can cancel it is because it takes multiple days to receive coin values in amounts greater than 1000, also I've heard from people that some banks won't debit coinbase right away with larger purchases so that can add yet another day or two before the funds leave your account. Since all of this waiting for the coins happens before your account ever gains control of the coins you should have enough time to contact coinbase and your bank and get it canceled.

tldr; Worse case scenario in my mind someone does manage to get into your coinbase, they would make a buy for ~999.99 dollars each week you don't notice because it would be instant and they could broadcast a transaction to a wallet they own within seconds.

[Mitchell]

Well, this is great news if you ask me. It's always nice to know that your coins are "secure" somewhere.

[haploid23]

So they're saying that they are immune against another mt.gox incident, as well as individual theft due to their part only. It's too bad you can't actually store your fiat on there as a reserve for day trading. All transactions are 4-day wait periods until your btc or USD clears.

[franky1]

as long as it covers bankruptcy. so that customers dont have to wait 2 years to even find out if they are gonna get 1penny

[virtfund]

I'm not a huge fan of Coinbase. Plenty of people have been having problems with it for me to take my business elsewhere. Coin.mx seems like a good alternative, though.

[keithers]

That is good to hear that they are insured, however the insurance that most people would be interested in is the one factor that looks like it isn't covered (if someone gets your log ins and is able to withdraw funds)...

[franky1]

That is good to hear that they are insured, however the insurance that most people would be interested in is the one factor that looks like it isn't covered (if someone gets your log ins and is able to withdraw funds)...

imagine how many people will claim they were hacked just to get free money..
chargeback scammers are ripe in the community and that is always their excuse

[rz20]

That is good to hear that they are insured, however the insurance that most people would be interested in is the one factor that looks like it isn't covered (if someone gets your log ins and is able to withdraw funds)...

What this insurance covers is if any workers steal a private key it would be covered.

[BitCoinDream]

http://blog.coinbase.com/post/95927658922/coinbase-insured

The insurance covers losses due to breaches in physical or cyber security, accidental loss, and employee theft.  It doesn’t cover bitcoin lost or stolen as a result of an individual user’s negligence to maintain secure control over their login credentials.

They are insured, NOT their customers. I have made the exit strategy bold. Moreover, what would happen for an address collision is not clear.

[cypherdoc]

Why is twobitidiot on Twitter claiming this only applies to hot wallet?

[QuestionAuthority]

Why is twobitidiot on Twitter claiming this only applies to hot wallet?

You typed out his name and you have to ask? lol

[haploid23]

They are insured, NOT their customers. I have made the exit strategy bold. Moreover, what would happen for an address collision is not clear.

When does ANY exchange insure lost bitcoins for an individual's own negligence? If they do insure these types of lost btc, then it's open for a lot of abuse. It's the equivalent of a chargeback.

[wasserman99]

That is good to hear that they are insured, however the insurance that most people would be interested in is the one factor that looks like it isn't covered (if someone gets your log ins and is able to withdraw funds)...

imagine how many people will claim they were hacked just to get free money..
chargeback scammers are ripe in the community and that is always their excuse

I would imagine that the insurance only covers their losses, not the losses of their customers. The insurance would likely only payout if they followed verifiable security policies that would prevent the vast majorities of possible thefts.

Any insurance company that would payout any kind of insurance claim solely because the insured claims to be a victim would be horrible at managing risk. 

[DannyHamilton]

Moreover, what would happen for an address collision is not clear.

It's also not clear what would happen if aliens from outer space land on the White House front lawn and use advanced mind reading technology to grab the userIDs and passwords of all Coinbase users and steal all of their bitcoins.

[cccarnation]

Getting insurance is good, getting paid out on it is another thing entirely.
Either way, good step!

[BitsBitsBits]

This is great news! Especially considering all the small vendors that are starting to use bitcoin as payment and use coinbase as an exchange and wallet.

[unexecuted]

Interesting. It's good to see Coinbase setting the standard here. Of course, employee infidelity and hacking are just two ways that bitcoins could disappear.

What about physical theft? Summary says that the insurance covers losses due to physical security breach, so presumably physical theft is covered. Missed that in the summary.
What about natural disasters, fire, flood, etc.?
What about kidnap/ransom/extortion of employees?
What about lawful confiscation (usually not covered by policies)?
What are the actual limits of the policy?
Are the limits on a per-account basis (like the FDIC), per occurrence basis, or per policy period?
Was the policy designed to cover the type of hacking that allegedly occurred with Mt. Gox?

[illymoka]

"Coinbase is insured against theft and hacking in an amount that exceeds the average value of bitcoin we hold in online storage at any given time."

Yet elsewhere you claim that only 3% of deposits are online, so 97% of deposited bitcoin are uninsured.
Are we supposed to pretend that the 97% offline have zero risk of theft? If that was true why aren't those 97% insured also?
Wow. Sneaky.

[PenAndPaper]

That is a very positive development and coinbase is definetely one of the best companies in bitcoin.
Still i wouldn't consider online wallets for long term storage of big amounts of bitcoins.

[Bitcoinpro]

They have not provided a copy of their insurance contract and if their is a flash crash

on their own servers which they are in control and could even spread to other exchanges what

price will they payout, i would suggest the highest of all the 30-60-90 averages including

subset averages begging certain time frames before any events started unfolding,

if the price was to run down one week or one month before they declared an insurance cover

then the average price should be calculated before the price rundown, these tactics where

used very successfully up to 2-3 months before its was completely obvious mtgox was about

to go bankrupt.

[StatusSeeking]

wonder if by "online storage" they mean the percentage they keep available to trade (didn't they say this is like 3% or something?), or their cold storage wallets.

[BitCoinDream]

They are insured, NOT their customers. I have made the exit strategy bold. Moreover, what would happen for an address collision is not clear.

When does ANY exchange insure lost bitcoins for an individual's own negligence? If they do insure these types of lost btc, then it's open for a lot of abuse. It's the equivalent of a chargeback.

On the contrary, this clause can be used to give all the responsibility on customer for gross negligence.

[oceans]

I'm seeing this as it being them who are insured not their customers which means it's a good thing but not in terms of their customers who really could do with some kind of insurance for times when they fall to any bad losses. Hopefully in time something will be implemented.

[LiteCoinGuy]

to all noobs:

It doesn’t cover bitcoin lost or stolen as a result of an individual user’s negligence to maintain secure control over their login credentials.

[Bitcoinpro]

I'm seeing this as it being them who are insured not their customers which means it's a good thing but not in terms of their customers who really could do with some kind of insurance for times when they fall to any bad losses. Hopefully in time something will be implemented.

We can speculate alot we need to see the insurance contract and how does it refer to the clients

in reality the client should be able to make a claim directly to the insurance company for this

to be of any benefit.

[PalmerLaura]

Interesting. It's good to see Coinbase setting the standard here. Of course, employee infidelity and hacking are just two ways that bitcoins could disappear.

What about physical theft? Summary says that the insurance covers losses due to physical security breach, so presumably physical theft is covered. Missed that in the summary.
What about natural disasters, fire, flood, etc.?
What about kidnap/ransom/extortion of employees?
What about lawful confiscation (usually not covered by policies)?
What are the actual limits of the policy?
Are the limits on a per-account basis (like the FDIC), per occurrence basis, or per policy period?
Was the policy designed to cover the type of hacking that allegedly occurred with Mt. Gox?

Setting the standard for what, deception? 97% of deposits are offline and therefore uninsured.

[CoolBliss]

Google "Meridian Global Insurance Limited" Xapo's insurance company, see what turns up... http://help.xapo.com/questions/89743-Is-Xapo-insured-by-a-third-party-insurance-company

[logger]

Interesting. It's good to see Coinbase setting the standard here. Of course, employee infidelity and hacking are just two ways that bitcoins could disappear.

What about physical theft? Summary says that the insurance covers losses due to physical security breach, so presumably physical theft is covered. Missed that in the summary.
What about natural disasters, fire, flood, etc.?
What about kidnap/ransom/extortion of employees?
What about lawful confiscation (usually not covered by policies)?
What are the actual limits of the policy?
Are the limits on a per-account basis (like the FDIC), per occurrence basis, or per policy period?
Was the policy designed to cover the type of hacking that allegedly occurred with Mt. Gox?

but "The insurance covers losses due to breaches in physical or cyber security and employee theft."

[AllYouCanDo]

but "The insurance covers losses due to breaches in physical or cyber security and employee theft."

U dont want crazy karpeles bs goin on

[Bizzaran]

Interesting. It's good to see Coinbase setting the standard here. Of course, employee infidelity and hacking are just two ways that bitcoins could disappear.

What about physical theft? Summary says that the insurance covers losses due to physical security breach, so presumably physical theft is covered. Missed that in the summary.
What about natural disasters, fire, flood, etc.?
What about kidnap/ransom/extortion of employees?
What about lawful confiscation (usually not covered by policies)?
What are the actual limits of the policy?
Are the limits on a per-account basis (like the FDIC), per occurrence basis, or per policy period?
Was the policy designed to cover the type of hacking that allegedly occurred with Mt. Gox?

but "The insurance covers losses due to breaches in physical or cyber security and employee theft."

It's good to know that they are covered in the event of someone stealing their employees.

[Drendas]

Interesting. It's good to see Coinbase setting the standard here. Of course, employee infidelity and hacking are just two ways that bitcoins could disappear.

What about physical theft? Summary says that the insurance covers losses due to physical security breach, so presumably physical theft is covered. Missed that in the summary.
What about natural disasters, fire, flood, etc.?
What about kidnap/ransom/extortion of employees?
What about lawful confiscation (usually not covered by policies)?
What are the actual limits of the policy?
Are the limits on a per-account basis (like the FDIC), per occurrence basis, or per policy period?
Was the policy designed to cover the type of hacking that allegedly occurred with Mt. Gox?

Setting the standard for what, deception? 97% of deposits are offline and therefore uninsured.

True. Policy limits on the hot wallets probably aren't more than a few million.
If cold storage is as safe as Coinbase claims, then it should be able to get a separate policy on the cold storage for a much lower premium per dollar of policy limits.

[wasserman99]

to all noobs:

It doesn’t cover bitcoin lost or stolen as a result of an individual user’s negligence to maintain secure control over their login credentials.

This message should also be addressed to scammers as I am sure that coinbase likely received at least 100 claims that bitcoin was "stolen" out of their account.

[AriceInWonderland]

Interesting. It's good to see Coinbase setting the standard here. Of course, employee infidelity and hacking are just two ways that bitcoins could disappear.

What about physical theft? Summary says that the insurance covers losses due to physical security breach, so presumably physical theft is covered. Missed that in the summary.
What about natural disasters, fire, flood, etc.?
What about kidnap/ransom/extortion of employees?
What about lawful confiscation (usually not covered by policies)?
What are the actual limits of the policy?
Are the limits on a per-account basis (like the FDIC), per occurrence basis, or per policy period?
Was the policy designed to cover the type of hacking that allegedly occurred with Mt. Gox?

Setting the standard for what, deception? 97% of deposits are offline and therefore uninsured.

Exactly - cold storage is not insured. I am not impressed at all.

[knifeedge]

Interesting. It's good to see Coinbase setting the standard here. Of course, employee infidelity and hacking are just two ways that bitcoins could disappear.

What about physical theft? Summary says that the insurance covers losses due to physical security breach, so presumably physical theft is covered. Missed that in the summary.
What about natural disasters, fire, flood, etc.?
What about kidnap/ransom/extortion of employees?
What about lawful confiscation (usually not covered by policies)?
What are the actual limits of the policy?
Are the limits on a per-account basis (like the FDIC), per occurrence basis, or per policy period?
Was the policy designed to cover the type of hacking that allegedly occurred with Mt. Gox?

Their statement is actually very vague and very limited. I wouldnt rely on this insurance.... And especially since coinbase is staying very quite about the bitlicense ordeal, Im starting to put less and less trust in them. I dont even use their service anymore and am eagerly waiting for my circle invite.

[littlebeetle]

Their statement is actually very vague and very limited. I wouldnt rely on this insurance.... And especially since coinbase is staying very quite about the bitlicense ordeal, Im starting to put less and less trust in them. I dont even use their service anymore and am eagerly waiting for my circle invite.

What does Circle's insurance information say?

[superbd]

Interesting. It's good to see Coinbase setting the standard here. Of course, employee infidelity and hacking are just two ways that bitcoins could disappear.

What about physical theft? Summary says that the insurance covers losses due to physical security breach, so presumably physical theft is covered. Missed that in the summary.
What about natural disasters, fire, flood, etc.?
What about kidnap/ransom/extortion of employees?
What about lawful confiscation (usually not covered by policies)?
What are the actual limits of the policy?
Are the limits on a per-account basis (like the FDIC), per occurrence basis, or per policy period?
Was the policy designed to cover the type of hacking that allegedly occurred with Mt. Gox?

Actually, Circle is setting the standard. They've already been insured by marsh - coinbase is catching up. circle is getting ready to haul past coinbase

[AaronCraig]

What about natural disasters, fire, flood, etc.?
What about kidnap/ransom/extortion of employees?

Exclusions include force majeure
https://support.coinbase.com/customer/portal/articles/1662379-how-is-coinbase-insured-

After thinking about your question more, I'm still unsure, since Kerpupples allegedly said it was due to Bitcoin's tx-malleability issue, and not MtGox itself. Not sure about this one, good question.

[Onanula]

What about natural disasters, fire, flood, etc.?
What about kidnap/ransom/extortion of employees?

Exclusions include force majeure
https://support.coinbase.com/customer/portal/articles/1662379-how-is-coinbase-insured-

After thinking about your question more, I'm still unsure, since Kerpupples allegedly said it was due to Bitcoin's tx-malleability issue, and not MtGox itself. Not sure about this one, good question.

"Force majeure" is a general term that encompasses a lot of different circumstances. I've never seen a policy exclude risks due to "force majeure" without defining precisely what those risks are. And in my experience, risks like war, riots, and civil unrest are usually excluded, while risks like flooding, fire, and other natural disasters are usually, but not always, covered.
I would not characterize kidnap, ransom, and extortion as force majeure.

And the whole transaction malleability issue - that might make a good insurance coverage case! (Which would be good for people like me, bad for everyone else.)

[wasserman99]

What about natural disasters, fire, flood, etc.?
What about kidnap/ransom/extortion of employees?

Exclusions include force majeure
https://support.coinbase.com/customer/portal/articles/1662379-how-is-coinbase-insured-

After thinking about your question more, I'm still unsure, since Kerpupples allegedly said it was due to Bitcoin's tx-malleability issue, and not MtGox itself. Not sure about this one, good question.

"Force majeure" is a general term that encompasses a lot of different circumstances. I've never seen a policy exclude risks due to "force majeure" without defining precisely what those risks are. And in my experience, risks like war, riots, and civil unrest are usually excluded, while risks like flooding, fire, and other natural disasters are usually, but not always, covered.
I would not characterize kidnap, ransom, and extortion as force majeure.

And the whole transaction malleability issue - that might make a good insurance coverage case! (Which would be good for people like me, bad for everyone else.)

It is not hard to protect yourself from malleability issues. I would highly doubt that coinbase wold suffer any losses due to malleability.

When gox disclosed their losses due to malleability, other major exchanges temporary suspended withdrawals, however none of them were vulnerable and were able to resume withdrawals without changes to their processes.

[NikkieBeraj]

What about natural disasters, fire, flood, etc.?
What about kidnap/ransom/extortion of employees?

Exclusions include force majeure
https://support.coinbase.com/customer/portal/articles/1662379-how-is-coinbase-insured-

After thinking about your question more, I'm still unsure, since Kerpupples allegedly said it was due to Bitcoin's tx-malleability issue, and not MtGox itself. Not sure about this one, good question.

Might want to check, but several months ago a story circulated with proof that fewer than ~200 BTC were ever stolen due to tx malleability. If this specifically was the claim Mark made, then it's a lie.

[Jeramom]

Interesting. It's good to see Coinbase setting the standard here. Of course, employee infidelity and hacking are just two ways that bitcoins could disappear.

What about physical theft? Summary says that the insurance covers losses due to physical security breach, so presumably physical theft is covered. Missed that in the summary.
What about natural disasters, fire, flood, etc.?
What about kidnap/ransom/extortion of employees?
What about lawful confiscation (usually not covered by policies)?
What are the actual limits of the policy?
Are the limits on a per-account basis (like the FDIC), per occurrence basis, or per policy period?
Was the policy designed to cover the type of hacking that allegedly occurred with Mt. Gox?

Actually, Circle is setting the standard. They've already been insured by marsh - coinbase is catching up. circle is getting ready to haul past coinbase

Marsh is a broker, not an insurer.

[WineAndWhiskey]

wonder if by "online storage" they mean the percentage they keep available to trade (didn't they say this is like 3% or something?), or their cold storage wallets.

Good catch! According to their security page https://coinbase.com/security:
Up to 97% of customer funds are stored offline
AND
Funds not stored offline are covered by insurance
So yeah, only hot (online) storage is insured.

[Gogo ppp]

Interesting. It's good to see Coinbase setting the standard here. Of course, employee infidelity and hacking are just two ways that bitcoins could disappear.

What about physical theft? Summary says that the insurance covers losses due to physical security breach, so presumably physical theft is covered. Missed that in the summary.
What about natural disasters, fire, flood, etc.?
What about kidnap/ransom/extortion of employees?
What about lawful confiscation (usually not covered by policies)?
What are the actual limits of the policy?
Are the limits on a per-account basis (like the FDIC), per occurrence basis, or per policy period?
Was the policy designed to cover the type of hacking that allegedly occurred with Mt. Gox?

Setting the standard for what, deception? 97% of deposits are offline and therefore uninsured.

Things like this are very disturbing, and contribute to the overall feeling for myself and others that this is a sketchy company.

The more open and transparent they can be, the more trust can be gained.
Making deceptive statements causes a lack of trust that can take a long time to be regained.

[keithers]

I have little by little started moving the holdings that i had over at coinbase over to different clients (in which I control the private keys).   When I first started in BTC, Coinbase was the most natural fit because it was the easiest and fastest way for me to buy and store BTC.

Don't get me wrong, I still use Coinbase whenever I need to buy small amounts of BTC, but as they have grown and grown, I don't want to get into a position where for some reason accounts get frozen and then I lose access to that part of my holdings.

I just leave a small amount now over at Coinbase for when I need to sell a little (which is rare).   I keep my savings elswhere.   

It is cool that they have have made the fact that they are insured public.   The problem is that they are insured...not necessarily the users..

[yitingyou]

I want to know insured by which insurance company

[keithers]

I want to know insured by which insurance company

Coinbase is insured by Aon (who Coinbase states that they are the world's largest insurance broker).   I am not sure if they are the largest or not.

Here is a link to their website:  http://www.aon.com/default.jsp


Again, let me reiterate, that Coinbase has stated that THEY are insured for holding your coins.  YOU are NOT insured against your log-ins being compromised and losing coins as a result...

[12inchdick]

It specifically does not insure against individual users' bitcoins being stolen

[CokeCoin]

This is awesome, but I'm still going to store my btc offline.

[GTA]

Coinbase, what is the claim procedure and where is the fineprint pease?

[Summer,69]

So... what about insurance on your cold storage? Are you keeping that a secret from everyone for another year, as well?
Oh, wait, I'm guessing you don't have any, and that 97% of your (our) bitcoin are completely uninsured.
Fail.

[polunna]

"Coinbase is insured against theft and hacking in an amount that exceeds the average value of bitcoin we hold in online storage at any given time."

Yet elsewhere you claim that only 3% of deposits are online, so 97% of deposited bitcoin are uninsured.
Are we supposed to pretend that the 97% offline have zero risk of theft? If that was true why aren't those 97% insured also?
Wow. Sneaky.

I think the idea is that the hot wallets are the ones that are most at risk. By insuring them, you decrease the risk of a financial loss if something happened to them.
Of course, there's always a risk that the insurer will be insolvent when it comes time to pay the claim. You can attempt to re-insure your way out of that, but at the end of the day, there will always be some risk.

[bambino]

"Coinbase is insured against theft and hacking in an amount that exceeds the average value of bitcoin we hold in online storage at any given time."

Yet elsewhere you claim that only 3% of deposits are online, so 97% of deposited bitcoin are uninsured.
Are we supposed to pretend that the 97% offline have zero risk of theft? If that was true why aren't those 97% insured also?
Wow. Sneaky.

I think the idea is that the hot wallets are the ones that are most at risk. By insuring them, you decrease the risk of a financial loss if something happened to them.
Of course, there's always a risk that the insurer will be insolvent when it comes time to pay the claim. You can attempt to re-insure your way out of that, but at the end of the day, there will always be some risk.

Great, so insuring the offline wallets should be inexpensive and easy to do, right?

[QuestionAuthority]

It specifically does not insure against individual users' bitcoins being stolen

That depends on what you mean by "stolen".

In reference to your forum name: Do you want one, do you have one or do you like to play with them? It's not really clear.

[Nagle]

Coinbase, what is the claim procedure and where is the fineprint pease?

Right. Is Coinbase, the company, insured, or are Coinbase's customers insured?

This is a huge difference. If Coinbase goes broke, like Mt. Gox, and only the company is insured, you lose. If the customer's balances are insured for the benefit of the customer (as is the case with US banks (FDIC, up to $250K) and brokers (SIPC, up to $500K), you get paid back.

If the customers were actually insured, they'd have the insurance terms and carrier publicly posted. They don't.

[knifeedge]

This is good to hear but still doesn't mean keep your Bitcoin savings in Coinbase.

[MightyStorm]

Google "Meridian Global Insurance Limited" Xapo's insurance company, see what turns up... http://help.xapo.com/questions/89743-Is-Xapo-insured-by-a-third-party-insurance-company

[AllYouCanDo]

What happens when the price becomes $10,000 per btc does the insurance cover then?

[Bizzaran]

What happens if the value of the Bitcoin you hold increases 10x in value over a short time? Does your insurance scale up as Bitcoin increases in value?

[Nagle]

Google "Meridian Global Insurance Limited" Xapo's insurance company, see what turns up... http://help.xapo.com/questions/89743-Is-Xapo-insured-by-a-third-party-insurance-company

Right. They own their own insurance company, which insures them. It's based in Bermuda. Not good.

Some very big companies like AT&T and Boeing have their own captive insurers, but that's usually for tax reasons. They handle things like auto insurance for company cars, and maybe fire insurance. Captive insurers usually re-insure; they have a policy with another insurer with some multi-million dollar deductible in case something really bad happens. The little stuff they handle in-house.

Xapo, not so much.