DeFi insurance protocol InsurAce said it had every right to shorten the claim period from 15 days to seven days for users affected by the Terra USD (UST) decoupling event, but added that it had processed nearly all 173 claims submitted and $11 million will be paid.
InsurAce (INSUR) is the third largest decentralized finance (DeFi) protocol insurance provider with a market cap of $15 million.
On May 13, InsurAce caused a stir by announcing a shortened claim window related to Anchor (ANC), Mirror (MIR) and stablecoin Terra USD (UST) following the Terra (LUNA) lay-1 blockchain crash.
Its chief marketing officer, Dan Thomson, told Cointelegraph on Thursday that, according to data from CoinGecko, as the price of UST had fallen to $0.08 by May 13, it was necessary for the company to shorten the claim window for Terra’s 234 portfolios to prevent further losses. He added:
“We made this change in accordance with our terms of service. We don’t think it makes sense to delay the process for the sake of those who lost money and stakers who must be compensated.”
The move sparked controversy in the cryptocurrency community, with some skeptical that InsurAce was trying to reduce the amount of claims it had to pay. On May 24, FatMan, a member of the Terra Research Forum, told his 52,000 Twitter followers that InsurAce had made a "dirty move" and that the company should not try to "backtrack" on agreements with clients.
But Thomson said most of the 173 claims submitted, other than those that were rejected, had been processed and the agreement was set to pay claimants about $11 million. He added,
"We want the best for everyone here, but if this was traditional insurance, people would be locked in litigation for months or years."
Thomson also said the agreement may consider processing the remaining 61 insurance claims that have not yet been filed.
The collapse of Terra and UST has caught the attention of regulators around the world. In order to find out whether Kwon and Luna Foundation Guard (LFG), who manage Terra funds, have committed criminal acts, South Korea restarted the famous financial crime unit "Grim Reapers of Yeoui-do".
Thomson noted that InsurAce may also have legal recourse in cases where UST's decoupling is not just a failure of the agreement. However, he said: "I believe Terra and LFG have more important things to do, so we will eventually come to an agreement."
The price of INSUR has fallen 7.6 percent in the past 24 hours to $0.28, according to data from CoinGecko.
Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.