The DeFi insurance protocol InsurAce says it was within its rights to reduce the claims period for people affected by the collapse of Terra USD (UST) from 15 days to seven, but added that it has already processed almost all 173 claims submitted and will pay $11 million..
InsurAce (INSUR) is the third largest provider of insurance for decentralized finance protocols (DeFi), with a market capitalization of USD 15 million.
On May 13, InsurAce caused quite a stir when it announced that it had shortened the claims window for those with coverage related to Anchor (ANC), Mirror (MIR), and the Terra USD (UST) stablecoin following the collapse of the Terra (LUNA) layer 1 blockchain. ).
But CMO Dan Thomson told Cointelegraph on Thursday that his move to shorten the claims window for Terra’s 234 wallet hedges was necessary to prevent further losses as UST had fallen to $0.08. on May 13, according to CoinGecko. And he added:
“It is in our terms of service to make such changes. We thought there was no point in delaying the process on behalf of those who lost money and the fraudsters who would have to pay the claims.”
The move was controversial in the cryptocurrency community, with some members suspecting that InsurAce was trying to reduce the number of claims it would have to pay.. FatMan, member of the Terra Research Forum, told them to his 52,000 Twitter followers on May 24 that InsurAce had made “a dirty move” and that the company should not try to “sneak away” from its agreement with customers.
A dirty move from @InsurAce_io – setting an arbitrary ‘claim deadline’ after which UST holders who bought depeg insurance cannot get their money back. I know you guys didn’t collect premiums for long, but this is how things work – a promise is a promise – don’t weasel out of it. pic.twitter.com/5dYuN7hGOZ
— FatMan (@FatManTerra) May 23, 2022
A dirty move by @InsurAce_io: Setting an arbitrary “claim deadline” after which UST holders who purchased disparity insurance can’t get their money back. I know they didn’t collect premiums for a long time, but that’s the way things work. A promise is a promise… don’t walk away from it. pic.twitter.com/5dYuN7hGOZ
But Thomson said that, outside of those rejected, most of the 173 claims filed have already been processed and that the protocol was ready to pay around USD 11 million to claimants. And he added,
“We want the best for everyone, but if this were traditional insurance, people would be stuck in litigation for months or years.”
Thomson also suggested that the protocol could consider processing the claims of the remaining 61 covers that have not yet been submitted.
The collapse of Terra and UST has attracted the attention of regulators around the world; South Korea’s legendary financial crimes unit, the “Grim Reapers of Yeoui-do”, were resurrected to discover whether Kwon or the Luna Foundation Guard (LFG), which managed Terra’s funds, had committed any crimes.
In the event that the removal of the UST conversion was not just a protocol failure, Thomson noted that InsurAce might also have legal recourse.. However, he did say, “I’m sure Terra and LFG have bigger fish to fry, so that’s a bridge we’ll cross when we get to it.”
INSUR is down 7.6% in the last 24 hours, trading at USD 0.28 according to CoinGecko.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Keep reading:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.