Comment by patio11 | Hacker News Reader

Comment by patio11 | Hacker News Reader

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Mt. Gox tried to secure insurance of customer deposits. Japanese insurance companies asked them about the specifics of their business and then said, to paraphrase, "Oh HELL no." One of the issues was that they were awaiting guidance from the Financial Services Authority, because insurance companies hate uncontrolled regulatory risk. The other issues were the sort of thing which will get your Errors and Omissions insurance application circular filed regardless of whether you're running an exchange or running a web development shop.

E&O insurance is surprisingly simple to understand. You fill out a 5ish page application, which asks you about the character of your business, your tech infrastructure, and your procedures/policies/etc regarding particular risks. The underwriter reads your application then asks some drilldown questions. The two I got were "Confirm Mr. McKenzie has 5+ years of professional experience in system administration" and "Confirm that the use of Appointment Reminder in a hospital is for the hospital's business administration or the convenience of patients, rather than for treatment/diagnosis/etc of a medical condition." (Translation: If it breaks, does anyone die? If so, we will probably not write this policy.)

I'm curious if this is due to Mt. Gox not trying hard enough. Recently a Bitcoin startup was able to obtain insurance from Lloyd's: http://arstechnica.com/business/2014/01/backed-by-lloyds-of-....

If this theory is true, presumably Karpeles would not have done this after the 2011 hack, because that would be insurance fraud (falsely obtaining insurance on the theft of coins that have already been stolen). It's possible that it would have been more difficult at that point because of Bitcoin being less mature.

But isn't Lloyd's famous for insuring what most other companies won't insure?

Yes. But from what I understand, this is because Lloyd's is a marketplace and not a traditional insurance company. They put wealthy entities in contact with people with peculiar insurance needs and let them work it out.

That's the classic move: outsource the risk to other people's money, and pocket some fees. Lloyd's seems a little like a bookie.

In the Eastern Bloc, in the '80s there was a new small fab being built to produce PROMs, PLDs and clone CPUs. Although the country in question was never charged with computing (as opposed to, say DDR, Bulgaria) it actually was onto FPGAs in stealth.

Obviously, it was burnt to ashes the next day, and Lloyd's paid out. One wonders, if somebody was funding Lloyd's, because this was practically guaranteed to happen given the circumstances. Today in the free market, you can freely choose between Altera (San Jose, California, U.S.) and Xilinx (San Jose, CA, USA).

Any links to the full story, or maybe just some keywords I can use to search the google?

I too was intrigued. Googling for UNITRA-CEMI, I found a reference to a fire in a east block factory in Hungary in 1985.

> Hungary had even less success with integrated circuits in the Soviet Era. Hungarian IC production was initiated in > 1985 under licenses from the Soviet Union and East Germany, > but the factory burned down the following year, destroying all the equipment.

http://brie.berkeley.edu/publications/WP126.pdf

I'm not sure, but if that's the case I wonder why Karpeles didn't go there (again presuming this attempt was made before the theorized 2011 theft).

Insuring Bitcoin in 2011 sounds like a scam already.

It is not insuring the value of bitcoins, but the operation of the company. Regardless of the legitimacy of bitcoins or their value, the company is providing a service and it can be insured against lawsuits for its own mistakes. In 2011 the potential losses for its mistakes were much lower.

E&O is almost impossible to get if you are considered to be trading.

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