How FTX Custody Cover holders can prepare for claims filing


How FTX Custody Cover holders can prepare for claims filing

In November 2022, FTX Trading Ltd. filed for bankruptcy and halted withdrawals on both the FTX International and FTX US centralized exchanges. Each exchange halted withdrawals at different times.

Custody Cover

Custody Cover protects against a loss of funds for crypto assets that are held in a custodial account. Once FTX International and FTX US announced that they were halting withdrawals, the 90-day provision in Section 1.2 took effect — members who held active cover when withdrawals were first halted have to wait for 90 days to pass before claims can be filed.

Section 1.2 in Nexus Mutual’s Custody Cover wording v1.0

You can read the full Custody Cover wording for more information.

Claims filing

You will be able to file FTX claims starting on:

  • 6 February 2023 at 10:54 PM UTC for FTX International claims
  • 9 February 2023 at 5:00 PM UTC for FTX US claims

You can check the FTX Halted Withdrawals list to see if your cover was active at the time withdrawals were halted.

If your FTX Custody Cover is one of those listed as eligible for claims filing, then you’ll be able to file a claim.

When you are able to file your claim, you can head to the Nexus Mutual user interface and begin the process. If you have any issues, you can head to the Nexus Mutual Discord, create a post in the DAO forums channel with the Claims tag, and start a conversation.

Verifying custodial account ownership

You will need to verify that you own the account associated with your upcoming claim.

The verification process will be conducted off-chain: you will send your uncensored account statements and any other supporting evidence (e.g., support emails with your name, withdrawal requests confirmed by email, etc.) or, if you’re filing a claim for FTX International or FTX US and need to confirm proof of loss evidence, the correspondence you receive from Kroll to

This information will not be made public and will be used only to compare that the owner of the custodial account is the same individual/entity that is KYC’d as a Nexus Mutual member.

Once this has been completed, the Account Ownership Verified column in the Google Sheet that tracks claims for each event will be updated to a Yes for verified accounts.

See the Verifying custodial account ownership ahead of claims filing in February blog post for more information if you have not previously completed this step. You can verify your account before claims filing begins: feel free to begin this process at any time.

Proof of loss

Nexus Mutual requires proof of loss for Custody Cover claims. You’ll need to provide off-chain proof of loss. When you file your claim, you can attach a copy of your account statement, screenshots of your account balance, support emails where your withdrawal request has been confirmed, and other documentation that claims assessors can use to verify your loss.

Note: when claims filing begins, please be sure to censor any personal information you submit as proof of loss, as it will be public and available for all members to review.

Members who did not previously download their account statements or take screenshots of their account balance can contact Kroll Restructuring Administration LLC through their Contact Us page. This company is managing the FTX Trading Ltd. case. When you access the FTX website, you are redirected to their page.

Please read the FTX claims: verifying loss amounts ahead of claims filing on 6 February 2023 announcement for more information if you do not have proof of loss documentation.

If you already have proof of loss documentation, you do not need to contact Kroll.

Claims Assessment

If you’ve never filed a claim with Nexus Mutual before, you can read through the following section for an overview. And if you’re a member who would like to participate as a claims assessor, you can also read the Claims Assessment section.

You can file a claim up to two times; 10% of your cover cost is reserved for filing claims, as outlined in the diagram below.

Visual representation of the NXM reserved for claims filing when cover is purchased

Once your claim is submitted, claims assessors then review and assess the validity of your submitted claim.

The voting period lasts for a minimum of 36 hours. After this point the vote automatically ends on the earliest of either when:

  • Voting stakes of greater than 10x the cover amount have voted; or
  • 72 hours have passed.

The stake weighted voting outcome then determines the claim result. A claim is escalated to a full member vote if either:

  • Voting consensus is below 70%; or
  • Voting weight is less than 5x the Cover Amount.

What prevents claims assessors from denying my claim?

The claims assessment process is designed like an optimistic oracle, but instead of code, humans act as the oracles. The system is designed so that any attack would put more capital at risk than any potential profit that could be gained or any capital staked in risk assessment that could be saved.

Read more about the advisory board’s role in the claims assessment process in the Nexus Mutual documentation.

You can also review the mutual’s claims history in the Nexus Mutual documentation and directly on-chain.

Claims support

If you have any questions about claims filing, proof of loss, off-chain verification, or any other aspect of the upcoming claim event, please reach out in the Nexus Mutual Discord for support.