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SIM Swaps and Crypto Losses are not Covered by Identity Theft or other Insurance

SIM swap scams are a prime example of how cryptocurrency thieves can steal your money that is being held on exchanges.  Whether it is your retirement savings or kids’ college fund, a crypto loss is a big deal.

In 2021, 14 billion dollars worth of cryptocurrency was stolen, up from nearly 8 billion in 2020. Cryptocurrency sent to illicit addresses was mostly the result of theft, while some of the transfers were the result of scams.

Law enforcement’s ability to recover stolen crypto is growing. Like any white-collar crime involving individuals and smaller amounts of money, it is unlikely that local law enforcement and federal agencies will spend time recovering cryptocurrency transfers to illicit addresses that result from SIM swaps and weak security policies on cryptocurrency exchanges.

What about Insurance?

The U.S. Federal Insurance Deposit Corporation (FDIC) covers up to $250,000 in losses when held in banks. No similar protection exists for cryptocurrency. Exchanges, including Binance and Coinbase claim to insure cryptocurrency held on the exchanges.  The exchanges do not cover losses due to a SIM swap or extortion scheme where your credentials and passwords were used to initiate the illicit transactions.

Cryptocurrency losses due to theft or scams also are not covered by identity theft insurance. Traditional identity theft insurance covers your expenses in restoring your identity (legal fees, application fees, etc.) but it does not cover the financial losses that result from the theft.

1818 Legal Can Help

If you have been the victim of a SIM swap or other scam that used your credentials and passwords to transfer money out of your cryptocurrency exchange account to illicit wallets, your only path to recovery is private legal action

At 1818 Legal, we understand how these losses can happen and are experienced in negotiating recoveries for you.  If your account has been breached and money was stolen, contact us today!!  Read more about Crypto issues here.

 

 

The information in this blog post is provided for informational purposes only and is not intended to be legal advice. You should not make a decision whether or not to contact an attorney based upon the information in this blog post. No attorney-client relationship is formed nor should any such relationship be implied. If you require legal advice, please consult with an attorney licensed to practice in your jurisdiction.

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