Wesco Settles with IRA Financial Group After Cyber Breach
Insurance firm Wesco has agreed to settle with the IRA Financial Group after a cyber breach in 2022 resulted in the loss of $37 million in crypto for retirees. Wesco will cover the IRA’s legal costs and customer losses. The settlement comes after claims by Wesco that the professional liability policy it offered to IRA did not cover cyber threats or cryptocurrencies. However, the IRA argued that the policy wording did not specifically exclude cyber threats and accused Wesco of neglecting the issue. The settlement was reached following a class action lawsuit filed by IRA’s customers and Wesco’s subsequent action to declare no obligation to defend IRA.
Main Points:
- Wesco will cover the IRA’s legal costs and customer losses of $37 million resulting from the cyber breach.
- Wesco claimed that their professional liability policy did not cover cyber threats or cryptocurrencies, but the IRA argued that the policy wording did not explicitly exclude them.
- The settlement was reached after a class action lawsuit filed by IRA’s customers and Wesco’s attempt to avoid defending IRA in the lawsuit.
- Crypto custodian cybersecurity is a growing concern and is being addressed in regulatory frameworks in Hong Kong and Singapore.
- Crypto custodians play a crucial role in bridging the gap between traditional finance and crypto.
The Growing Importance of Crypto Custodians
Cybersecurity for crypto custodians has become a significant focus in regulatory frameworks in Hong Kong and Singapore. It is important for crypto companies to have robust cyber hygiene measures in place to protect against hacks. Additionally, regulations emphasize the separation of customer and corporate funds. Crypto custodians also employ techniques like multiparty computation to enhance security. Custodians, such as Gemini, offer institutional storage for crypto assets and keep customers’ keys offline in air-gapped cold storage. These custodians are crucial for bridging the gap between traditional finance and the world of crypto.
Hot Take:
The settlement between Wesco and IRA Financial Group highlights the importance of clear policy wording in the insurance industry. Insurance companies need to ensure that their policies explicitly state what is and isn’t covered to avoid disputes and potential losses for their customers. Additionally, the growing focus on crypto custodian cybersecurity reflects the increasing recognition of the importance of safeguarding digital assets. As the crypto industry continues to evolve, custodians will play a crucial role in providing secure storage solutions and building trust between traditional finance and the crypto space.