Clearing of digital asset contracts involves several risks that are important to understand before entering into orders, trades or positions related to these contracts, and before depositing funds to the clearinghouse. Specifically, customer digital asset balances held at the clearinghouse - whether or not they are backing orders, trades or positions - can be stolen, hacked, or lost. Thus, customer funds may become non-recoverable and irretrievably lost.
To reduce these risks, FTX US Derivatives uses industry-standard digital asset custody practices, including:
Insurance: Hot and Warm Wallets
FTX US Derivatives maintains a primary crime insurance policy from Aon in the amount of $7.5MM USD. This policy covers funds stored in hot and warm wallets. The policy covers certain but not all instances of theft, loss on premises, loss in transit, and third party computer and funds transfer fraud.
The exclusions listed in the policy include theft by a director or partner of FTX US Derivatives, a theft discovered by an employee but not disclosed to FTX US Derivatives, loss due to the giving of property in exchange or purchase, loss claimed solely due to inventory computation or accounting errors, loss due to breach of contract, loss due to war or acts of foreign enemies, loss due to radioactive contamination of property, any loss arising out of or in connection with, any circumstances or occurrences which occurred prior to the inception of this policy, loss resulting from the non-payment or default of any loan, loss resulting from payments or withdrawals involving items received by FTX US Derivatives that are not finally paid for, or any loss resulting solely from the network failure of a digital currency or digital asset cryptographic protocol.Insurance: Cold Wallets
FTX US Derivatives stores the majority of customer digital assets at BitGo Trust. Information on BitGo's $100MM USD insurance policy, which applies to all BitGo Trust balances where keys are 100% held by BitGo Trust and not just FTX US Derivatives customer balances, is available here
BitGo's policy covers only third-party hacks, copying, or theft of private keys; insider theft or dishonest acts by BitGo employees or executives; or loss of keys. Other losses are not covered.