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Crypto recovery and wallet insurance solve different problems. Recovery is an attempt to trace stolen assets and pursue a freeze or legal remedy; a tracing report cannot reverse a blockchain transaction. Insurance or platform protection may reimburse a qualifying loss, but only under specific terms—and a platform’s coverage may protect its own holdings rather than your account. In the United States, FDIC deposit insurance does not insure cryptocurrency.
What recovery can—and cannot—do after a crypto hack
Recovery is a process, not a guaranteed service. It can involve preserving evidence, reporting the theft, contacting a receiving exchange, and pursuing law-enforcement or civil routes where appropriate. Blockchain tracing may help identify transaction paths or an address associated with a service, but it does not return assets by itself or give a private company authority to seize them.
The FBI stated on September 3, 2024: “Private sector recovery companies cannot issue seizure orders to recover cryptocurrency.” Exchanges may freeze accounts under their own procedures or in response to legal process; a trace or report does not compel them to do so. The FBI also says victims can pursue civil litigation. FBI guidance on cryptocurrency recovery fraud
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What to do if crypto was stolen or compromised
- Stop sending money. Do not pay a supposed recovery firm or anyone claiming that another fee will unlock funds.
- Preserve details. Record transaction dates, amounts, payment types, wallet addresses, relevant account information, and identifying details about the suspected perpetrator. Keep messages and other records.
- Report the incident. U.S. victims can report suspected fraud to the FBI’s Internet Crime Complaint Center (IC3). The FBI advises reporting promptly and supplying transaction information. Its cryptocurrency investment-fraud guidance also explains what information to provide.
- Contact the exchange or service involved. If the funds reached an identifiable exchange, notify it using its official support or reporting channels. Any freeze depends on its procedures or legal process; do not assume a report will recover the funds.
The FBI’s August 11, 2023 public-service announcement reported more than $2.5 billion in cryptocurrency investment-fraud losses in 2022. That figure concerns investment fraud losses, not all crypto theft, wallet hacks, insured losses, or recoveries. IC3 announcement
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- Effortlessly build your crypto portfolio via the all in one Ledger Wallet app: buy, sell, send, receive, swap, stake and more across popular blockchains. 15,000+ coins & tokens in a single dashboard. Keep a close eye on the market. Compare service providers. Track performance. Get timely alerts. Build your portfolio with confidence.
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How wallet insurance and platform protection differ
“Wallet insurance” can refer to different arrangements: insurance for a company’s custody systems, a platform’s own conditional protection program, or a policy naming a customer or another party as insured. The label alone does not establish that your balance is covered. Check the insured party, custody arrangement, covered event, exclusions, limit mechanics, claim evidence, and how any payment is calculated and made.
FDIC insurance is not crypto insurance
For U.S. readers, FDIC insurance applies to eligible deposits at insured banks in the event of an insured bank failure. It does not insure crypto assets, cover theft or fraud, or protect against the failure or insolvency of a non-bank crypto custodian, exchange, broker, wallet provider, or neobank. A provider’s relationship with a bank does not make a crypto balance FDIC-insured. FDIC crypto fact sheet
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Platform coverage may protect the platform, not your account
| Example | What the source says | Important limit |
|---|---|---|
| Coinbase crime policy | Coinbase says its policy protects a portion of digital currencies in its storage systems against theft, including cybersecurity breaches. | It excludes losses from unauthorized access to a customer account caused by credential breach or loss. Coinbase says losses may exceed insurance recovery and that, in a covered security event, it will endeavor to make customers whole—not that every claim is guaranteed payment. Coinbase insurance explanation |
| Crypto.com App policy | The published policy describes possible goodwill protection up to USD 250,000 equivalent for certain unauthorized withdrawals after hacks or phishing. | It excludes transfers that a customer was deceived into authorizing. This is a conditional, platform-specific program, not general insurance for crypto users. Check the current policy and eligibility. Crypto.com App policy |
The NAIC likewise describes Coinbase’s crime insurance as protecting company assets, not individual accounts against unauthorized access caused by compromised or lost credentials. NAIC cryptocurrency overview
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Coverage offered by an exchange or custodian does not automatically follow crypto into a wallet controlled by the customer. The available examples do not establish a universal personal policy covering every hacked self-custody wallet, lost key, compromised seed phrase, phishing incident, or mistaken or authorized transfer. For a specific policy, read its definitions and exclusions and verify who is insured, what custody arrangement qualifies, what evidence a claim requires, and whether a payment would be in fiat or crypto.
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Lloyd’s announced a Coincover-linked liability policy for theft from online hot wallets in February 2020, with flexible limits starting at £1,000. That historical launch announcement shows that a wallet-specific product was introduced then; it does not establish that consumers can buy it today or that it covered every wallet or incident. Lloyd’s 2020 announcement
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to assess a recovery offer or coverage claim
Spot recovery-fraud warning signs
The FBI warns that recovery-fraud operators may contact victims through social media, messaging, advertisements, comments, or search listings. Be wary of upfront fees paired with a promise to recover funds, further fee demands, questionable tracing reports, or claims of law-enforcement or legal affiliation. Do not send money or sensitive identifying information to an unsolicited recovery operator. Report suspected fraud to IC3. FBI recovery-fraud notice IC3 PSA
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Read the policy, not just the coverage headline
- Who is insured? Is the policy for the platform, a custodian, an individual customer, or a shared pool?
- Which assets and custody arrangements qualify? Distinguish exchange-held balances from assets in a self-custody wallet.
- What caused the loss? Look for definitions covering theft, a platform security breach, credential theft, phishing, social engineering, lost keys, and customer-authorized transfers.
- What is excluded? Check for lost credentials, user error, transfers the customer approved, market movement, or chain and protocol failures.
- How does the limit work? Establish whether it is per person, per event, or shared across customers, and whether it is a policy limit or discretionary benefit.
- How are claims paid? Check required evidence, claim procedures, payout currency, valuation date, and whether the wording creates a guaranteed contractual payment or describes an effort or goodwill protection.
These distinctions are specific to the policy and jurisdiction. The FDIC rules described above are U.S.-specific, and consumer remedies, insurance terms, and reporting options vary with location and custody relationship. Company policies can change, so confirm current terms before relying on a stated limit or eligibility rule.
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