👻 Beware of digital asset insurance ‘Ghost Broking’ this halloween!

In this halloween blog post, we wanted to touch on the topic of ghost broking within the cryptoasset sector.

🎃 Ghost broking is a well known and established scam preying on unwitting victims who don’t understand the insurance market, typically targeting areas where there is a shortage of insurance cover or where insurance is expensive such as motor insurance for young drivers. Here is an excellent article by the Insurance Fraud Bureau quantifying the problem.

👻 Ultimately ‘Ghost Broking’ is selling the promise of insurance with no insurance contract behind the proposition. Alongside the FOS we are keen to remind insurance buyers to be be diligent this Halloween.

👹 The Crypto Asset sector has recently become a target for opportunists preying on the lack of available regulated insurance cover and offering products that are not admitted (therefore don’t meet regulated requirements such as MICAR) or even have no insurance company behind them.

😱 In some instances they use decentralised liquidity pools (such as DAO or member driven protocols) with no certainty as to if and what may be paid if a policy holder suffers a loss. These entities are simply anonymous groups of people on the internet meaning that there is no proof of any capital, or worse still the activities behind the capital itself are deliberately obscured. There is no regulation, no auditing, no accountability or ombudsman and no process to identify whether the board are ‘fit and proper’ to run any business, least of all a regulated one meaning that if you have a dispute you are completely on your own.

👺 Ultimately, this is just money down the drain. Stay tuned for future blog posts, where we highlight what to look out for in a genuine digital asset insurance provider!

☂️ Thankfully, after Halloween 2024 there will be a genuine insurance option available. For free, no obligation help with insurance for your crypto holdings or your digital asset business contact us: richard@redefind.io