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in the largest heists via a hack , coincheck in Tokyo was hacked and 400-500 million was taken in crypto currency .
but they do not have enough in assets to cover investor losses . they said they can cover some but not all losses from the heist . they are not sure at this point how their investors will make out .
having digital wallets hacked and no fraud insurance adds another problem to dealing with these digital wallets . you really need to understand the security levels and procedures they use . coincheck was not up to par in this respect .
just last week my debit card was somehow hacked and used to buy 2200 dollars worth of crypto stuff from simplex-bitstamp .
so fraud in all areas of crypto is getting more wide spread . i got reimbursed but i am not sure the bank can track down the fraudsters with this digital currency stuff .
well it is a problem . you have different companies claiming different levels of wallet protection but you know what ? hackers can get in to everything today one way or another .
i mean i never ever use my debit card and yet those numbers were obtained and used to buy crypto last week . so these breeches can be right from the inside .
no protection and insurance is a big problem on this stuff .
at least with equities i am protected . i don't know how it works but what about when you buy gbtc through fidelity . i would thnk you are covered if the gbtc vault is hacked but i really don't know what would happen .
lots of insurance only covers you when it is the insured that causes the loss not others outside of the insured . we saw that with our home insurance when we had a home in an hoa .
if the hoa did something wrong and was sued for more than their policy limits , the homeowners are liable for the balance . except our insurers said they only cover acts by us that result in an award , not acts by others .
so not really sure what happens if the gbtc underlying assets are hacked .
at least with equities i am protected . i don't know how it works but what about when you buy gbtc through fidelity . i would thnk you are covered if the gbtc vault is hacked but i really don't know what would happen .
SIPC max limit is $500,000 for securities and only $250,000 for cash.
Only have a second to comment here I'll try to drop back by. Honestly I havn't been following this particular story that closely but sounds like they weren't following crypto security 101 which is don't keep a lot of money in hot wallets. Most exchanges keep most of their money offline in cold wallets and very little in hot wallets. Doing this very basic thing would make this a small loss and something you wouldn't even have heard about to being a big story.
For users don't keep money on exchanges unless your actively trading and spread yourself out across a couple exchanges to diversify risk.
I don't really know much about that exchange so can't really comment on how they are insured, how users money is insured, if they utilized cold storage but sounds like the most basic producedures weren't being followed
SIPC max limit is $500,000 for securities and only $250,000 for cash.
fidelity and vanguard carry extended insurance with no upper limits on stocks but 1.9 million on cash .i would assume others do too
Excess of SIPC
In addition to SIPC protection, Fidelity provides its brokerage customers with additional "excess of SIPC" coverage. The excess coverage would only be used when SIPC coverage is exhausted. Like SIPC, excess protection does not cover investment losses in customer accounts due to market fluctuation. It also does not cover other claims for losses incurred while broker-dealers remain in business. For example, fraud claims would not be covered if the brokerage firm was still in operation. Total aggregate excess of SIPC coverage available through Fidelity's excess of SIPC policy is $1 billion. Within Fidelity's excess of SIPC coverage, there is no per customer dollar limit on coverage of securities, but there is a per customer limit of $1.9 million on coverage of cash awaiting investment. This is the maximum excess of SIPC protection currently available in the brokerage industry.
Both SIPC and excess of SIPC coverage is limited to securities held in brokerage positions, including mutual funds if held in your brokerage account and securities held in book entry form.
Investment assets not covered by SIPC
Certain assets are not eligible for SIPC protection. Among the assets typically not eligible for SIPC protection are commodity futures contracts, precious metals, as well as investment contracts (such as limited partnerships), and fixed annuity contracts that are not registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933.
Only have a second to comment here I'll try to drop back by. Honestly I havn't been following this particular story that closely but sounds like they weren't following crypto security 101 which is don't keep a lot of money in hot wallets. Most exchanges keep most of their money offline in cold wallets and very little in hot wallets. Doing this very basic thing would make this a small loss and something you wouldn't even have heard about to being a big story.
For users don't keep money on exchanges unless your actively trading and spread yourself out across a couple exchanges to diversify risk.
I don't really know much about that exchange so can't really comment on how they are insured, how users money is insured, if they utilized cold storage but sounds like the most basic producedures weren't being followed
they were not following recommended security procedures . but that is a big risk since not many who speculate in this stuff even know what these good security measures are including myself .
plus as fast as these higher security levels are implemented hackers are already working on breaking them .if there is no fraud or theft coverage in place that is a real issue .
Last edited by mathjak107; 01-29-2018 at 08:26 AM..
It’s interesting to look at how other exchanges have handled large hacks. In the crypto currency world anything can become or be represented by a token, so twice I have seen a hacked exchange create a new token to represent the debt. They spread the debt out evenly over all customers, give them tokens that they promise to redeem at face value in the future. Then they open up a market to trade these debt tokens. People can wait for full value in the future if they trust that to happen, or they can sell for less on the market. Other folks can buy the discounted token if they think they can get face value later. The hacked exchange can even go to the market and buy back their debt at a discount.
Bitfinex did this with their last large hack, and they eventually bought back all of the tokens.
it seems not only worrying about market fluctuations but now hackers and fraud with no real fraud protection or insurance makes these a lot more riskier. and yes i mean riskier , not just volatility .
SIPC max limit is $500,000 for securities and only $250,000 for cash.
As Mathjak points out most larger firms carry excess insurance however there are a couple of other larger points. Most major firms are worth billions with some accounting standards to back them. Also if you were able to steal hundreds of millions in securities or usd and transfer them most places the assets would follow some AML and/or US tax base reporting making it much harder to simply disappear
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