Aon, the Global Insurance Broker, Hosts LXDX Leadership in London

A memo on cryptocurrency exchange insurance

Members of the LXDX leadership are in London this week, by invitation from Aon, meeting with underwriters to discuss insurance policy details and coverage options for our cryptocurrency exchange platform.

Cryptocurrency exchanges are prime targets for attacks; they provide custodianship of their users’ assets and significant amounts of liquid capital. At LXDX, we designed our security architecture to match those within government intelligence agencies, and we utilize multi-signature cold storage—reducing our risk assessment to near zero. Still, we wanted to do more.

LXDX began working with Aon earlier this year to design an insurance policy specifically for our exchange platform. Aon is the second largest insurance brokerage in the world and has shown strong leadership in facilitating coverage for this new asset class. They insure against breaches in physical security, cyber security, and employee theft, among others.

State of the industry

Hacking is a real threat. Adjusting for the price of BTC today, a whopping 16.3 billion USD-equivalent has been stolen from exchanges and their users since 2014. The Mt. Gox attack alone was a bigger heist than the top 10 biggest bank robberies in history (assuming the hackers had enough foresight to HODL the BTC they stole).

While banks are required to insure their depositors’ assets, there is no such requirement for cryptocurrency exchanges. Insurance policies are also difficult to acquire and come with high premiums. Coverage for digital assets has been reported as five times the cost as that for traditional asset coverage, and that’s only if a policy is granted after undergoing rigorous analysis.

Beyond information security

Security and transaction integrity is a prime focus of ours. LXDX CTO Steven Thomas formerly worked for the U.S. Department of Defense on cryptology and signal intelligence products. Under his leadership, we’ve built information protection similar to the architectures developed by intelligence agencies worldwide. These systems include multilevel physical and cybersecurity frameworks, hardware custody solutions (including fully isolated and fully cold wallets), and real-time trade surveillance.

We take extensive measures to ensure our customers and their assets are never compromised. However, just as we believe robust security measures are essential, it is just as important to insure against unforeseen anomalies.