BTER Slated to Pay Back All Stolen Funds through Partnership with Jua.com

Chinese altcoin exchange BTER was the subject of a monster-sized hack last February that saw to nearly $2 million in bitcoins being stolen from the company’s cold wallet reserves.  It was the second largest cyberattack of the year, and many felt sympathy towards the exchange; after all, it was one in a long line of recently victimized exchanges and businesses between MyCoin, Excoin and several others, but when the company announced that it wouldn’t be able to pay back any stolen funds, sympathy turned to anger and fear, and many began voicing their concerns over the lack of insurance in the world of virtual currency.

BTER Slated to Pay Back All Stolen Funds through Partnership with Jua.com

While insurance is still a topic that’s up in the air, BTER is now prepared to make amends and refund any and all lost coins through a new partnership with security firm Jua.com.

According to the company’s newly reopened website, customers will be paid back stolen funds over time through BTER’s future earnings and interest-free loans with Jua.com of up to 1,000 bitcoins.  The company announced on Twitter:

“Most markets are re-enabled now and we are making withdrawals work for more and more coins.”

Originally, the owners of BTER were planning on selling the platform, as they didn’t feel they possessed adequate funds to be able to pay back all affected customers, but that’s all changed with the new security agreement.  When talking about the trusted firm, BTER explains:

“Working with Jua.com, we reviewed all the security-related code on BTER completely and rebuilt the back-end, and trust all our cold wallets to our partner for specialized security storage, making a solid security foundation for BTER’s re-opening.”

The control of all of BTER’s hot wallets will also eventually be moved into the control of Jua.com.

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San Francisco-based Coinbase has published an interesting blog post on Wednesday, which essentially serves a means of comforting its users.

In short: the company announced that it holds insurance against both theft and loss of the bitcoin they hold — much of which belongs to its over one million users.

Interestingly enough, however, they say that they have been insured since November of 2013, adding that “given the recent claims of insurance in the industry,” felt it appropriate to inform its user base.

They write:

[blockquote style=”2″]Coinbase is insured against theft and hacking in an amount that exceeds the average value of bitcoin we hold in online storage at any given time. The insurance covers losses due to breaches in physical or cyber security, accidental loss, and employee theft. It doesn’t cover bitcoin lost or stolen as a result of an individual user’s negligence to maintain secure control over their login credentials.[/blockquote]

While other companies may claim to be insured, Coinbase says they’ve partnered with mega insurance broker Aon, and only use underwriters with high credit ratings (S&P rating of A+ or A.M. Best Rating of A XV or higher).

For users of the service, the news is welcomed. Many in the community fear holding bitcoins anywhere other than their own possession, and for good reason (see the Mt. Gox debacle earlier this year).

Users are not — and will not be — charged for the insurance.

Silbert Big Insurance

Barry Silbert, founder CEO of SecondMarket and the Bitcoin Investment Trust, posted an interesting tweet Friday morning indicating that insurance companies may be looking for a piece of the bitcoin pie:

Interesting. We’re starting to get approached by large, well-known insurance [companies] looking to offer insurance products on bitcoin exposure

As the bitcoin realms continues its growth, major companies are looking for ways to adapt their business models to include products central to the digital currency.

Insurance is a big thing. If you’ve got an account with an FDIC-insured bank in the United States, and they go under, your money is safe (assuming it’s below the FDIC limit).

Now imagine such insurance when it comes to bitcoin start-ups that hold significant amount of user funds. You can bet customers would feel a whole lot better storing their money on, say, Coinbase or Circle.

Just take a look back to February, when Mt. Gox said they no longer had access to the funds of their users — losses that amounted to hundreds of millions of dollars. Had there been insurance there, the outcome would have likely been different.

We’re at a point in time where things are getting very interesting in this space. It won’t be long until companies you’re familiar with have their hands in the bitcoin pot in some form or another.