Massachusetts Bay Insurance Company (MBIC) has released a formal statement refusing the compensation claim of leading bitcoin service provider BitPay, after the latter allegedly lost 5,000 in a scam.
MBIC also requested the court to dismiss the case, saying that BitPay’s circumstances are not covered by the policy since the scam did not happen on the service provider’s premises.
In an incident that MBIC categorized as indirect losses, BitPay was defrauded of 5,000 bitcoins in December 2014 when hackers allegedly used the emails and Google accounts of the service provider’s top officers to fraudulently transfer $1.85 million worth of bitcoins.
Upon discovery of the scam, BitPay claimed compensation amounting to $1 million ($950,000 after deductibles), the maximum coverage under their policy. MBIC rejected the claim, leading to a lawsuit in which the insurer said that the BitPay executives are responsible for the losses since their names and accounts authorized the disbursements.
MBIC said that it would only consider the incident a case of fraud if the alleged hackers made the transactions themselves. The policy itself does not cover losses incurred because of inadequate steps taken against cyberspace threats.
