Gemini Hot Wallet Crypto Balances Are Now Insured By Insurance Giant AON
Gemini, the digital-asset exchange founded by Cameron and Tyler Winklevoss, has announced that it secured insurance from AON for the cryptocurrencies held on behalf of customers that are in the exchange's hot wallet.
Gemini, the digital-asset exchange founded by Cameron and Tyler Winklevoss, has announced that it secured insurance from AON for the cryptocurrencies held on behalf of customers that are in the exchange’s hot wallet.
According to the official blog post:
“After a series of due diligence roadshows with industry-leading insurers, we are pleased to announce that we have secured insurance coverage for the digital assets that we hold on your behalf in our online hot wallet.”
Crypto assets now insured on Gemini
The cryptocurrency exchange October 3 revealed that it has obtained insurance coverage for the cryptocurrency assets that they hold for their clients in online (hot) wallets.
What is a hot wallet?
A hot wallet is a digital currency wallet that is on an internet-connected device. Exchanges must hold a small balance in a hot wallet for the purpose of supplying liquidity to clients looking to withdraw funds from the platform. Hot wallets are vulnerable to hacking when compared to ‘cold’ storage (wallets) that are held completely offline and thus, inaccessible by a malicious party.
The release added that coverage was obtained through a consortium of insurers globally arranged by Aon, adding to the already existing insurance for their U.S. Dollar reserve, which is covered by the Federal Deposit Insurance Corporation.
To be approved, the exchange had to prove to underwriters that it “is a leading, best-in-class exchange and custodian.”
Yusuf Hussain, Gemini’s head of risk, stated that cryptocurrency users are now looking for a level of insurance similar to what they have come to expect from traditional financial service firms.
By providing such services, Gemini has helped educate their insurers about the cryptocurrency industry and at the same time worked to ensure that consumers can trust crypto exchanges if they are operated transparently and safely.
Hussein added that following the high-profile hacks that cryptocurrency exchanges suffered over the past few months, it is best to be insured in order to avoid having your money stolen and offer the best protection for the clients.
Insurance adds to Gemini’s already high security
The cryptocurrency exchange keeps only a small portion of its assets in hot wallets to reduce their funds’ exposure to the internet, and thus the threat of hacks.
Even the funds stored on hot wallets are hosted using industry-leading Amazon Web Services (AWS), which has an excellent record of securing digital assets stored on its servers and has the necessary experience hosting other high-value projects.
The exchange’s hot wallets require multi-factor authentication, with most employees of the company not having access to them.
Instead, most of the exchange’s assets are stored on cold wallets. The exchange makes use of hardware security modules (HSMs), with keys generated, stored and managed onboard HSMs for as long as they exist.
Gemini making great progress
The Gemini cryptocurrency exchange has expanded aggressively over the past few weeks.
The biggest announcement by the company was the launch of the Gemini Dollar (GUSD), a stablecoin that is pegged 1:1 to the US Dollars, after receiving approval from regulators in the state of New York.
In September, Gemini announced that Robert Cornish, the former Chief Information Officer of the New York Stock Exchange (NYSE), would be spearheading the company’s technology initiative.
He would also be in charge of monitoring the deployment of NASDAQ’s SMARTS Market Surveillance technology.