News

Roughly 20% of all Bitcoin is locked in inaccessible wallets, lost forever in the digital void. But losing access to crypto doesn’t always have to mean financial ruin, according to Phil Johnston, director of marketing at Nexus Mutual .

Speaking on TheStreet Roundtable , Johnston explained how the company is building a decentralized alternative to traditional insurance — one that has already paid out millions to crypto investors left stranded by industry collapses.

Nexus Mutual, which Johnston described as the “leading on-chain insurance alternative,” has paid out over $18 million in claims since its launch in 2019. While its current coverage is mostly focused on protecting assets like Ethereum and Bitcoin, Johnston sees a future where blockchain insurance expands to cover real-world risks as well.

“For now, it’s primarily on-chain. We encourage others to build on our platform and leverage our capital pools, and some have experimented with covering real-world assets. We expect to see solutions like healthcare insurance or coverage for wildfires and floods built on top of our protocol,” he said.

Recent events such as the California wildfires that raged through parts of Los Angeles have exposed some of the issues with traditional insurance providers. Thousands had their coverage ended months before their communities were devastated.

Crypto needs protection — but not for memecoins

Crypto investors are known for taking extreme risks, especially when it comes to speculative assets like memecoins. Johnston didn’t sugarcoat it. “The biggest risk was buying it in the first place,” he said, laughing.

But for investors holding more established assets like Bitcoin and Ethereum, Nexus Mutual offers a level of financial protection that traditional insurance doesn’t. “Once you’ve got some wins under your belt and shift to safer assets like Ethereum or Bitcoin, you’re less of a degen and start looking for ways to protect it,” he explained.

Unlike traditional insurers, Nexus Mutual operates as a discretionary mutual, meaning members vote on whether to pay out claims instead of being bound by legal obligations. While this might sound risky, Johnston says it has led to a 100% payout rate on valid claims—a stark contrast to traditional insurance companies that often fight claims in court.

FTX crash victims got paid — in 90 days

When FTX collapsed in 2022, leaving thousands of traders stranded, Nexus Mutual stepped in. “When it shut down, we paid out over $5 million to cover holders,” Johnston revealed.

Rather than waiting years for bankruptcy proceedings with no guarantee of recovery, users who had Nexus coverage got their money back in just 90 days—a speed unheard of in traditional finance.