Blockchain security BitGo overstates insurance policy scope, uses “ambiguous language,” underwriter says

BitGo has claimed in a press release “third-party hacks” are covered by its $100 million cryptocurrency insurance policy. However, an anonymous underwriter accuses the company of overstating the policy's scope, CoinDesk reports. The company’s insurance policy is covered by a group of 10 Lloyd’s of London underwriters, led by AMTrust.

The anonymous accusation points to the “ambiguous language” used by BitGo which does not state explicitly the policy covers only cold storage — assets stored offline. The insurance does not cover any hot-stored funds.

“Cover is only provided for ‘storage media’ in secure storage,” an underwriter states in an email obtained by CoinDesk. “In other words, there is no cover for any loss of sensitive information (private keys) resulting from the generation, transportation or transaction phases of the private keys’ life cycle.”

BitGo, on the other hand, opposes the claim. The company states there is no ambiguity to the official statement as it states: “The $100 million of insurance covers digital assets where the offline private keys are held 100% by BitGo.” Therefore, BitGo says, there should be no misconception over whether hot storage is a part of the insurance policy. The company states that even after the removal of “remote network access,” technology, such as USB device or frequency reader, still poses a threat to the security of the cold-stored keys.

A spokeswoman told The Block that the firm is working with clients and a third party provide to allow them to insure their hot wallet assets in certain cases. 

"They will be in a situation in which their environments will be evaluated," the spokeswoman said. "But it provides the opportunity for clients to purchase their own hot wallet insurance."