insurance coverage for blockchain and cryptocurrency...

Insurance Coverage for Blockchain and

Cryptocurrency RisksD&O, Cyber, CGL, E&O, Commercial Crime, and Property Insurance Coverage

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

The audio portion of the conference may be accessed via the telephone or by using your computer's

speakers. Please refer to the instructions emailed to registrants for additional information. If you

have any questions, please contact Customer Service at 1-800-926-7926 ext. 1.

WEDNESDAY, MAY 29, 2019

Presenting a live 90-minute webinar with interactive Q&A

Stephen D. Palley, Partner, Anderson Kill, Washington, D.C.

Tips for Optimal Quality

Sound Quality

If you are listening via your computer speakers, please note that the quality

of your sound will vary depending on the speed and quality of your internet

connection.

If the sound quality is not satisfactory, you may listen via the phone: dial

1-866-871-8924 and enter your PIN when prompted. Otherwise, please

send us a chat or e-mail [email protected] immediately so we can address

the problem.

If you dialed in and have any difficulties during the call, press *0 for assistance.

Viewing Quality

To maximize your screen, press the F11 key on your keyboard. To exit full screen,

press the F11 key again.

FOR LIVE EVENT ONLY

Continuing Education Credits

In order for us to process your continuing education credit, you must confirm your

participation in this webinar by completing and submitting the Attendance

Affirmation/Evaluation after the webinar.

A link to the Attendance Affirmation/Evaluation will be in the thank you email

that you will receive immediately following the program.

For additional information about continuing education, call us at 1-800-926-7926

ext. 2.

FOR LIVE EVENT ONLY

Program Materials

If you have not printed the conference materials for this program, please

complete the following steps:

• Click on the ^ symbol next to “Conference Materials” in the middle of the left-

hand column on your screen.

• Click on the tab labeled “Handouts” that appears, and there you will see a

PDF of the slides for today's program.

• Double click on the PDF and a separate page will open.

• Print the slides by clicking on the printer icon.

FOR LIVE EVENT ONLY

STRAFFORD WEBINARS

Live Webinar

May 29, 201911:30 am – 1:00 pm

BLOCKCHAIN, BITCOIN CRYPTOCURRENCY AND

INSURANCE

6100039456v1 © 2018 Anderson Kill P.C. All Rights Reserved.

DISCLAIMER

The views expressed by the participants in this program are not those of the participants’ employers, their clients, or any other organization. The opinions expressed do not constitute legal advice, or risk management advice. The views discussed are for educational purposes only, and provided only for use during this session.


Speaker

Stephen D. Palley, Esq.Partner, Washington, DC

Anderson Kill(202) 416-6552

[email protected]

Stephen D. Palley is a partner in the Washington D.C. office of Anderson Kill. A seasoned trial lawyer and litigator with extensive experience in insurance recovery, Stephen also has significant hands-on software development and design experience. He is co-chair of Anderson Kill's recently launched Blockchain and Virtual Currency group, a cross-disciplinary team providing counsel to Blockchain entrepreneurs and investors in areas including litigation, trial practice, insurance coverage, tax, intellectual property, corporate/transactional and employment law. Stephen has written and been quoted widely on legal issues arising from the use of Blockchain technology, with appearances in both print and television media.

In two decades of litigation experience, Stephen has handled a wide variety of commercial disputes in state and federal courts across the United States, including significant construction insurance and environmental insurance matters. His most recent trial experience includes a Fall 2017 jury trial in federal court regarding coverage for decades of environmental cleanup costs under insurance policies issued in the 1970s, leading to an eight figure jury verdict in favor of the policyholder. He has also represented owners, general contractors, construction managers and others in insurance transactions concerning tens of billions of dollars' worth of construction projects throughout the United States.

In the area of software design and development, Stephen has worked with clients to develop a wide range of compliance driven software platforms, including direct response advertising and dispute resolution software, as well as advising clients developing platforms with blockchain functionality.

Stephen was selected for inclusion in the 2019 The Best Lawyers in America list for Insurance Law. In 2018, Stephen was recommended in The Legal 500 United States for Insurance - advice to policyholders.


“[W]hat we view as money has changed over time. Cowrie shells once were such a medium but no longer are, see J. Weatherford, The History of Money 24 (1997); our currency originally included gold coins and bullion, but, after 1934, gold could not be used as a medium of exchange, see Gold Reserve Act of 1934, ch. 6, §2, 48 Stat. 337; perhaps one day employees will be paid in Bitcoin or some other type of cryptocurrency, see F. Martin, Money: The Unauthorized Biography — From Coinage to Cryptocurrencies 275–278 (1st Vintage Books ed. 2015). Nothing in the statute suggests the meaning of this provision should be trapped in a monetary time warp, forever limited to those forms of money commonly used in the 1930’s.”

-- Breyer, J., (dissenting opinion) Wis. Cent. Ltd. V. United States,138 S. Ct. 2067 (2018)


Agenda

• Understanding the risk/technical review:

• What is blockchain?

• What is cryptocurrency?

• Applicable insurance policies

• Review of caselaw


Bitcoin in Two Slides (1 of 2)Blockchain is a decentralized, append-only database.

Bitcoin is built on a blockchain.

Blockchain data is stored on nodes (individuals who run the bitcoin software).

Nodes are analogous to servers.

Miners solve complicated math problems to add information (blocks) to the bitcoin blockchain.

➢In exchange, they receive bitcoin (block reward) and are paid a transaction fee.


Bitcoin in Two Slides (1 of 2)A cryptographic hash is a long and unique series of letters and numbers.

A bitcoin transaction involves three hashes

➢Sender’s public address

➢Sender’s private key

➢Recipient’s public address

Anyone who learns private key can transfer bitcoin.

Keys can be stored on a third party exchange, in a software wallet, or in a physical hardware wallet.


Theft, Wallets and Exchanges

➢ Hot storage vs. cold storage

➢ Wallet

– Control your own keys

– Rely on software and your own security

➢ Exchange

– Trust third party

– Rely on their software and their security


“Stable Coins”


“JPM Coin”


Industry participants at risk• Exchanges

• Miners

• Custodians

• Payment processors

• Advisors/consultants

• Funding platforms

• Programmers/developers

• Financial institutions


Regulatory enforcement activity continues …


Regulatory Guidance is Rapidly Evolving • SEC “Framework for “Investment Contract” Analysis of

Digital Assets”• https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets

• FinCEN’s “Application of FinCEN’s Regulations to Certain Business Models Involving Convertible Virtual Currencies”

• https://www.fincen.gov/sites/default/files/2019-05/FinCEN%20Guidance%20CVC%20FINAL%20508.pdf


Regulatory Guidance is Rapidly Evolving


Hard Forks?


FMV

➢IRS Guidance by analogy - Publication 561

➢Determined as of the date of donation

➢Closing price?

➢Exchange?

➢Private vs. Public coins or tokens


Distributed Presence = Distributed Risk


Recent cases• United States v. Maksim Zaslavskiy, 1:17-cr-00647-RJD-RER (E.D.N.Y., Sept. 11, 2018) (whether a token is a security

under the Howey test is a question for a jury; an indictment that alleged fraud in connection with a token sale not be dismissed for want of enforcement power).

• Babiak v. Mizuho Bank, №1:18-cv-352, 2018 U.S. Dist. LEXIS 159696, at *2 (E.D. Va. Sep. 17, 2018) (Transferring bitcoin to a Japanese exchange was not enough standing alone for a Virginia federal court to exercise personal jurisdiction over the exchange’s Japanese bank when the bank shut down U.S. wire transfers).

• Norman v. Stratman, 2018 Cal. Superior LEXIS 884 (Bitcoin is property for purposes of pleading a cause of action for conversion).

• CFTC v. My Big Coin Pay, 2018 U.S. Dist. LEXIS 164932 (D. Mass, Civ. №18–10077-RWZ, September 26, 2018) (All (?) virtual currencies are commodities within the meaning of the Commodities Exchange Act.)

• USA v. 89.9270303 Bitcoins, more or less, (W.D. Tex. № SA-18-CV-998, Sept. 25, 2018) (In rem asset forfeiture proceeding against bitcoin held on hardware device)

• Leidel v. Coinbase, 729 Fed. Appx. 883 (11th Cir. 2018) (District court refused to enforce an arbitration clause in the Coinbase clickwrap terms of service; 11th Circuit affirms).

• Open Foundation v. Local Ventures & Investments, LLC et al., No. 6:18-cv-1322, Doc. No. 8 (M.D. Fla, September 5, 2018) (Denying ex parte TRO motion seeking asset freeze because plaintiff didn't meet high burden).

• In re Tezos Secs. Litig., 2018 U.S. Dist. LEXIS 157247 (D.N.D. Cal. August 7, 2018) (rejecting application of Swiss forum selection clause in ICO terms absent evidence of plaintiff's actual knowledge; though defendants might be able to later “breathe life into the argument” if he can be shown to have had actual knowledge. Also, the Court noted the “local interest” in having US Securities laws litigated in the US).


Recent cases• Berk v. Coinbase, Inc., 18-cv-01364-VC (N.D. Cal., 10/23/2018) (Lawsuit accuses Coinbase of tipping off insiders to

imminent listing of bitcoin cash -- a fork of bitcoin; court says arbitration clause not applicable because lawsuit didn't arise out of services; while CEA doesn't apply, court grants plaintiff time to amend negligence claim to plead duty with greater specificity).

• Alibaba Group Holdings v. AlibabaCoin Foundation, 2018 U.S. Dist. LEXIS 180884 (S.D.N.Y., 18-cv-2897, 10/22/2018) (Lanham Act lawsuit by Alibaba Group against AlibabaCoin Foundation and others, which is a group based out of Dubai and Belarus alleging unlawful use of Alibaba’s trademarks and symbols to promote AlibabCoin; court grants preliminary injunction to plaintiff. Minimum contacts for jurisdictional purposes satisfied by one AlibabaCoin purchaser in New York state that engaged in three transactions + evidence that over 1,000 New York users visited AlibabaCoin’s website by mid-June 2018. )

• Bitmain v. John Doe (W.D. Washington, № 2:18-cv-1626, November 7, 2018) (John Doe lawsuit by mining equipment manufacturer filed for purposes of issuing subpoenas to crypto exchanges).

• In the Matter of: Joseph Kim, (CFTC docket № 19–02, October 29, 2018) (Trader misappropriated crypto assets from employer for trading; "the misappropriation of funds or virtual currencies in connection with contracts of sale of commodities in interstate commerce constitutes fraud that violates 6(c)(1) of the [Commodities Exchange] Act and Regulation 180.1(a).")

• Gevorkyan v. Bitmain (N.D. Cal., № 5:18-cv-07004, November 19, 2018) (Class action against Bitmain alleges that when mining equipment was turned on it initially mined crypto for the manufacturer, not the customer)


Recent cases• Blockchain Mining Supply and Services LTD v. Super Crypto Mining, Inc. and DPW Holdings, S.D.N.Y., 1:18-cv-

11099, 11/28/2019 (Lawsuit alleges that failure to deliver mining equipment in timely fashion led to diminishment in their value, due to decline in market value of cryptocurrencies).

• Kimmelman v. Wayne Insurance Group, 2018 Ohio Misc. LEXIS 1953 (Oh. Ct. of Common Pleas, Franklin County, 18 CV 1041, 9/25/2018) (Bitcoin isn't money so money sublimit not applicable to first party property loss claim involving $16,000 in stolen bitcoin).

• United American Corp. v. Bitmain et al., (S.D. Fl., 18-cv-25106, 12/6/2018) (Sherman and Clayton act lawsuit alleges "a" scheme by a tight knit network of individuals and organizations to manipulate the cryptocurrency market for Bitcoin Cash, effectively hijacking the Bitcoin Cash network, centralizing the market, and violating all accepted standards, protocols and the course of conduct associated with Bitcoin since its inception.")

• Securities and Exchange Commission v. AriseBank, Jared Rice Sr., and Stanley Ford (N.D. Tex., № 3:18-CV-00186, 12/11/2018) (Defendants claimed to be officers in a "decentralized bank"; claimed they were buying an FDIC insured bank and raised money based on that and other claims that turned out to be false; judgment for SEC (by consent) "for disgorgement of $2,259,543.83, representing profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in the amount of $68,423.32, and individually liable for a civil penalty in the amount of $184,767.00 each.")

• Solis v. Latium Network, 2018 U.S. Dist. LEXIS 207781 (D.N.J., 10–10255, 12/10/2018) (Applying Howey Test to token sale and quickly finding that tokens were in fact (unregistered) securities)


Recent cases• Federal Trade Commission v. Apex Capital Group, LLC (C.D. Ca. 2:18-cv-09573, 12/18/2018) (FTC enforcement action order specifies

that any crypto-assets held by the defendants must also be identified and frozen; anyone who receives notice of the order is required to turn over "cryptographic hash value, time stamp, transaction data, public addresses or other information sufficient to identify, locate, and track cryptocurrency in any blockchain or distributed ledger technology system that is belonging to, for the use or benefit of, under the control of, or subject to access by any Defendant…")

• Symphony FS, LTD v. Thompson, 2018 U.S. Dist. LEXIS 21464 (E.D. Pa. 5:18-cv-3904, 12/20/2018) (Litigation over failed bitcoin purchase using double escrow, where money was sent but bitcoin was never delivered; court denies preliminary injunction seeking asset freeze).

• Kleiman v. Wright, №18-CV-80176, 2018 U.S. Dist. LEXIS 216417 (S.D. Fla. Dec. 27, 2018) (lawsuit involving over a million bitcoin, currently worth about $4 Billion; court says that under florida law it is possible to state a claim for conversion of bitcoin as long as it can be identified "with particularlity")

• Roberts et al. v. Obelisk, Inc., 3:18-cv-02898 (D.S.D.Cal, December 28, 2019) (Lawsuit alleges that contracts for delivery of mining equipment investment contracts that require state law securities registration).

• Fabian v. Nano f/k/a Railblocks f/k/a Hieusys LLC et al., 4:19-cv-00054 (D.N.D.Cal., January 3, 2019) (Putative class action securities litigation larded heavily with quotation from social media platforms used to alleges that so-called decentralized cryptocurrencyreally isn’t)

• ZG Top Technology Co., Lt. v. John Doe, (D.W.D.Wash., 2:19-cv-00092, January 22, 2019) (Plaintiff operates a “global trading platform and has offices in Mongolia and China.” On November 25, 2018, John Doe “attacked” Plaintiff and stole 100 ETH and 330,000 USDT. Using the magic of immutable blockchain ledger wizardry, plaintiff was able to track the crypto to wallet addresses maintained by Bittrex; lawsuit filed in order to issue subpoenas to Bittrex to discover identity of bad guy(s)).


Recent cases• Gersh v. Anglin, Case No. CV 17–50-M-DLC-JCL (D. Mont. January 18, 2019) (Court grants motion to compel involving

interrogatory asking for "all bank and/or crypto-currency accounts by account number, account holder, bank name, and bank location, used by you or for which you had access at any time between 2013 and the present. This includes, but is not limitedto, any and all Bitcoin, Monero, or other crypto-currency accounts you have used or for which you had access at any time between 2013 and the present." Because there was a punitive damages claim, Court said that some pre-judgment asset discovery would be allowed).

• State v. Espinoza, 2019 Fla. App. LEXIS 1133 (Fl.Ct.App.3d 2019) (Reversing trial court and holding that exchanging money for bitcoin required registration as Money Servicing Business under Florida law).

• United States v. Stetkiw, 2019 U.S. Dist. LEXIS 16607 (E.D. Mich., Feb. 1, 2019) (Bitcoin is money under the Bank Secrecy Act because Bitcoin is money or funds under the statute because “they can be easily purchased in exchange for ordinary currency, act[ ] as a denominator of value, and [are] used to conduct financial transactions.”) (citing cases)

• Sultan v. Coinbase, E.D.N.Y., 18–934, 1/24/19. (When Plaintiff signed up on CB website he clicked a check box that included next to it the statement “I certify that I am 18 years of age or older, and I agree to the User Agreement and Privacy Policy.” User Agreement and Privacy Policy were underlined and links that connected to the referenced docs. The User Agreement had an arbitration clause with bold-font words in it. Court says this is enough to manifest asset and applies clause).

• SEC v. Blockvest, S.D. Cal., 8CV2287-GPB(BLM), February 14, 2019 (Court reconsiders prior ruling denying SEC injunctive relief; applying Howey test says that "promotional materials on Defendants’ website, along with their whitepaper and social media accounts constituted an offer of unregistered securities, even if no sale was consummated.").

• In the Matter of Gladius Network, LLC, SEC Administrative Proceeding №3–19004 (Order Instituting Cease and Desist Proceedings), February 20, 2019 (Token sale was unregistered securities offering but because issuer self-reported to SEC, commission did not impose penalty, subject to Gladius' remedial step (including rescission offer) and prospective compliance)


Bitcoin Risks“Since 2011, there have been 56 cyberattacks directed at cryptocurrency exchanges, initial coin offerings and other digital-currency platforms around the world, according to an analysis by Autonomous Research, a London-based financial-services research firm, bringing the total of hacking-related losses to $1.63 billion.”**

** Steven Russolillo & Eun-Young Jeong, “Cryptocurrency Exchanges Are Getting Hacked Because It’s Easy,” Wall St. J., July 16, 2018.


Bitcoin RisksTheft is not the only risk factor.

Loss by any means is a problem.

An owner of Bitcoin might print and store a copy of private keys in a desk drawer at home or in the office.

If a fire, flood, or other peril destroys the home or office and the keys with it, the owner not only loses the ability to transfer the Bitcoin but also, as a practical matter, loses the Bitcoin.


Bitcoin RisksOpen source as an attack vector.

“DAO hack,” in which a decentralized investment fund was created on the Ethereum blockchain in 2016.

➢It raised more than $150 million in cryptocurrency, but soon after its launch, an error in the DAO code allowed a user to move nearly a third of those funds to private control.

Because the code (the digital signature, to be precise) was public but “immutable,” it was impossible to stop the hack while it was happening and while remaining true to the concept of immutability


Insuring Bitcoin LossesHomeowner’s policy, exemplar language“Personal property owned or used by an insured person anywhere in the world. When personal property is located at a residence other than the residence premises, coverage is limited to 10% of Coverage C—Personal Property Protection.“

Sublimit: “[m]oney, bullion, bank notes, coins and other numismatic property.”

Is Bitcoin “money” for purposes of applying sublimit?

**Allstate Insurance Co. Standard Homeowners Policy, Coverage C, ¶ 1, at 6.


Is Bitcoin Money? What exactly *is* money?

➢McKee v. State Farm Fire & Casualty Co. (“Limiting the reasonable meaning of ‘money’ to only that which is actually circulating as part of the currency is not reasonable.”)

➢Michaels v. State Farm Fire & Casualty (Coin collection was “numismatic property” and not money, so $200 sublimit for “money, bank notes, coins and medals” did not apply).


Is Bitcoin Money?Bitcoin White Paper: “Bitcoin is an innovative payment network and a new kind of money.”

FinCEN says that under the Bank Secrecy Act “[a]ccepting and transmitting anything of value that substitutes for currency makes a person a money transmitter under the regulations implementing the BSA.”[1]

CFTC: Bitcoin and other cryptocurrencies should be treated as “commodities” under the Commodities Exchange Act.[2]

IRS: “For federal tax purposes, virtual currency is treated as property. . . . Under currently applicable law, virtual currency is not treated as currency that could generate foreign currency gain or loss for U.S. federal tax purposes.” [3]

[1] U.S. Dep’t of Treasury Financial Crimes Enforcement Network, No. FIN-2013-G001, Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies 3 (Mar. 18, 2013).[2] In re Coinflip, Inc., d/b/a Derivabit & Francisco Riordan, CFTC No. 15-29, slip op. at 3 (Sept. 17, 2015).[3] I.R.S. Notice 2014-21.


Is Bitcoin Money?Kimmelman v. Wayne Insurance Group, 2018 Ohio Misc. LEXIS 1953 (Oh. Ct. of Common Pleas, Franklin County, 18 CV 1041, 9/25/2018)• Plaintiff submits $16,000 claim for stolen “BitCoin”. Policy has

$50,000 personal property limit. Insurance company applies $200 sublimit for “money”.

• Plaintiff sues. Insurance company moves to dismiss on pleadings. • The insurance company argues bitcoin is money by referring to

“articles from CNN, CNET and the New York Times” and a reference to IRS Notice 2014–21.

• The Court holds that because “BitCoin” is treated as property by the IRS it’s not money.

• Motion denied.


Crime PoliciesBitpay, Inc. v. Mass. Bay Ins. Co., No. 1:15-cv-03238-SCJ

(N.D. Ga. filed Sept. 15, 2015)

CR 25 44 11 15 (Include Virtual Currency as Money) (for use with commercial crime policies);

CR 25 46 11 15 (Include Virtual Currency as Money) (for use with employee theft and forgery and government employee theft and forgery policies).


CR 25 44 11 15


CR 25 46 11 15


D&O and E&O

➢ What is a “Claim”?

– Director or Officer: “A written demand for monetary damages or nonmonetary relief.”

– Private company: “A written demand for monetary, nonmonetary or injunctive relief.”

– Public company: securities law violations and derivative suits

– Regulatory investigations


D&O and E&O

➢ What is a “Wrongful Act”?

– D&O: “Any error, misstatement, misleading statement, act, omission, neglect, or breach of duty…by an Insured Person or an Organization in his or her Insured Capacity”

– E&O: “Any actual or alleged negligent act, negligent error or negligent omission committed by the Insured solely in the performance of or failure to perform professional services for others in the Insured's Profession . . .”


D&O and E&O

➢ Potential Limits to Coverage

– Who is an “Insured”?

– Exclusions (electronic data/cyber loss)

➢ How is the business defined?

➢ Disclosure issues

➢ Investigations or regulatory actions


ALL RISK POLICIES

➢ Care, custody and control … ownership

➢ Tangible vs. intangible

➢ Exclusions for computers and data

➢ Sublimits

➢ NMA 2914


Is Damage to a Database Physical Loss?• NMS Services Inc. v. The Hartford, 62 Fed. Appx. 511

(5th Cir. 2003).

• American Guarantee v. Ingram Micro, 2000 U.S. Dist. LEXIS 7299 (D. Ariz., Apr. 18, 2000).

• Southeast Mental Health Center Inc. v. Pacific Ins., 439 F. Supp.2d 831 (W.D. Tenn. 2006)

• Landmark American v. Gulf Coast, 2012 U.S. Dist. LEXIS 45184 (M.D.La. Mar. 26, 2012)


CGL POLICIES

➢ Define the liability

➢ Property damage (to what?)

➢ PIA Coverage

➢ Suit

➢ Exclusions; CL 380


CRIME POLICIES

Computer Fraud Insuring Clause

• “The Company shall pay the Organization for direct loss of Money ... sustained by an Organization resulting from Computer Fraud committed by a Third Party.”

• “Computer Fraud [is] the unlawful taking or the fraudulently induced transfer of Money ... resulting from a Computer Violation.”


CRIME POLICIESDefinitions

• “Computer Violation” → “the fraudulent (a) entry of Data into or deletion of Data from a Computer System; (b) change to Data elements of program logic of a Computer System, which is kept in machine readable format or (c) introduction of instructions, programmatic or otherwise, which propagate themselves through a Computer System,” directed against an Organization.

• “Data” → “a representation of information, knowledge, facts, concepts or instructions which are processed and stored in a Computer System.”


Cold storage/Hot StorageExchange/custodian coverage

➢Hot:

− Manuscript crime

➢Cold:

− Manuscript crime,

− Specie


Other Insurance Issues• D & O, particularly for regulatory investigations.

• Note recent addition of ICO exclusions.

• Crime

• Cyber (again, look for crypto exclusions)

• E & O/professional liability, where tech services/development at issue

• Kidnap & ransom insurance

• Reps and warranties insurance


RISKS FROM BLOCKCHAIN

A. Theft and/or “social engineering”

B. Forking

C. Valuation

D. Software vulnerabilities

E. Data/privacy laws

F. Regulatory Issues

G. Lost keys (no theft)

H. Locked wallets

I. Decentralized governance

J. Political risk

K. Entity D & O

L. Public and Private Keys

M. Hacks

N. Mistakes


Hacks

➢ ” hackers have stolen nearly $2 billion worth of cryptocurrency since the beginning of 2017”

Once hailed as unhackable, blockchains are now getting hacked, Technology Review, Feb. 19, 2019 (https://www.technologyreview.com/s/612974/once-

hailed-as-unhackable-blockchains-are-now-getting-hacked/)

➢ System glitches (DAO)

➢ DNS; flooding

➢ Bitfinex – was it a “hack”?

➢ 51% attack


Emerging Blockchain Risks: Distributed Biometrics?


WHAT ARE BIOMETRICS?

➢ Possibly anything other than your name or demographics (https://www.webopedia.com/TERM/B/biometric_data.html)

➢ Physical, physiological or behavioural characteristics


ADVANTAGES & RISKS

➢ How is biometric data collected?

➢ Current uses

➢ It has to be stored somewhere in order to match it for security.


DATA PRIVACY LAWS AND BIOMETRICS

➢ States with biometric specific statutes− Illinois − Texas− Washington

➢ California Consumer Privacy Act

➢ Determining who owns the data− Indemnity, transactions


INSURANCE COVERAGE

➢ Cyber policies

➢ Other policies

➢ United States Fire Ins. Co. v. Xanitos, et al. (N.D. Ill 5/3/2019)


CYBER WAR (AND OTHER HOSTILITY)


CYBER INSURANCE AND THE WAR EXCLUSION EXAMPLES


YES!

P

P


QUESTIONS?

insurance coverage for blockchain and cryptocurrency...

Documents