This is the continuation of my previous post, which assessed the ToS of Binance, Kraken and Coinbase. See the TLD;DR for all of these exchanges at the end.

After a judge has ruled that customer's assets do not belong to them based on the bankrupt-firm's Terms of Service (ToS), I decided to check how deep we could go were one of the exchanges in the title to fail. I was looking specifically for insurance and/or ownership of the assets.

OKX

No insurance whatsoever. They are quite emphatic on that, giving you a glimpse on what to expect in the case of an " irreconcilable shortfall":

https://preview.redd.it/w54xneuxb7da1.png?926&format=png&auto=webp&s=0f3ebe024bc7d41c063a3fe57db41c9822f94a91

In addition, the text reads:

4.14 When the OKX Platform is unable to operate properly because of the following circumstances and the user is unable to access the Services or place or cancel an order, we assume no liability for damages. These circumstances include, but are not limited to:

(a) system downtime during maintenance as announced by the OKX Platform;

(b) telecom or networking equipment issues;

(c) typhoon, earthquake, tsunami, flood, power failure, war, terrorist attacks, and otherforce majeurefactors;

(d) any other issues, including hacker attacks, computer virus intrusion or attack, Website or backend maintenance and upgrade, banking related issues, government regulation or mandates, freezing order imposed by any Competent Authority and any other third party issues; and

(e) damages to users or other third parties caused by third parties.

On the ownership, even if the assets are considered to be in your name, you're not entitled to anything in the case of a default and/or insolvency. They also reserve the right to register your funds in either their or a custodian's name:

Custody risk

6.36 OKX may hold Fiat Currencies and Digital Assets with third parties. However, the Digital Assets OKX holds are not “deposits” nor are they intended to be held as any other regulated product or service under Applicable Laws.

6.37 In certain circumstances permitted by the Applicable Laws and Regulations or market practice of the relevant jurisdiction OKX may register or record a User’s Account in the name of the custodian or under OKX’s name. If the Accounts are held in the name of the custodian or OKX’s name, such assets may not be segregated from OKX’s assets and, in the event of a default by the custodian or OKX, may not be as well protected from claims of the creditors of the custodian or OKX’s creditors as would be the case if the User’s client assets had been segregated from the assets of the custodian or OKX’s assets.

6.38 In the event of the insolvency or any other analogous proceedings of a third party holding a User’s Fiat Currencies and/or Digital Assets, OKX may only have an unsecured claim against the third party on the behalf of a User and a User may be exposed to the risk that the Fiat Currencies, Digital Assets or any other property received by OKX from the third party is insufficient to satisfy the User’s claim and the claims of all other relevant Users.

6.39 If OKX deposits a User’s Fiat Currencies and/or Digital Assets with a third party, such Fiat Currencies and/or Digital Assets may be pooled with those belonging to other Users. In such circumstances, a User’s individual client entitlements may not be separately identifiable by separate certificates, other physical documents of title or equivalent electronic records and, in the event of an irreconcilable shortfall after OKX’s insolvency, any Users whose assets have been pooled may share in that shortfall in proportion to their original assets in the pool. Any entitlements or other benefits arising in respect of pooled assets will be allocated pro rata to each User whose assets are so pooled.

6.40 Fiat Currencies and/or Digital Assets may be held by a third party appointed in good faith by OKX, or by OKX’s nominees or sub-custodians. Such third parties are not under the control of OKX, and OKX accepts no liability for any default of any nature by such third parties and, in the event of any such default, a User may suffer total or partial loss in respect of the User’s Account. The extent to which a User may recover its Fiat Currencies and/or Digital Assets in jurisdictions may be governed by specific legislation or local rules.

I'm sorry for all the bolding, but I couldn't possibly post this without emphasizing this whole section. It's like you put your money there, they register it somewhere on their name, and if they go bankrupt, well, it's on their name.

Crypto.com

There is only insurance for Unauthorized Transactions, limited to $250,000. You have to open a request and submit proof, but they reserve the right to determine whether a transaction was unauthorized or not:

https://preview.redd.it/ty70ic1097da1.png?818&format=png&auto=webp&s=b139c3dcfaabe0ed8d45205daed404b9287ae30e

In fact, they exempt themselves from paying you if the services are closed for any reason whatsoever:

https://preview.redd.it/cwdo439f97da1.png?801&format=png&auto=webp&s=20649dfea2d072cfa53b530970678b1e79f60be1

In the next paragraphs, they say that you're entitled to your remaining funds in the case of an account closure, but that, by a court order, they might be able to not pay you:

https://preview.redd.it/i7zv8c9y97da1.png?797&format=png&auto=webp&s=5c0eb0f2bd4443fa89f01c037d1121e1da27c715

This means that even if the services are stopped due to a bankruptcy, there's lot of room for you to not get a dime, and please someone correct me if I'm wrong in my interpretation.

Other aspects:

1. The U.S. terms state that you agree to not be part of a class action and that you waive your rights to a jury trial (p. 25, Art. 16.2 and 16.3, respectively);
2. They have an interesting section on the risk of using digital assets, with the phrase "Past performance is not an indicator of future performance". Someone is lurking this sub!

I could not find any mention to the ownership of the assets.

TL;DR

• Neither provide insurance against bankruptcy (at least not that I could find)
• Neither acknowledge one's ownership of assets (at least not that I could find)
• Crypto.com provides insurance up to $250,000 in the case of Unauthorized Transactions, subject to their opinion/take on whether it was really unauthorized or not
• OKX has a shady part where they reserve the right to deposit your money on their or a custodian's name. If they go bankrupt, you have no claim whatsoever. Now that you're here go and read the OKX part above.

TL;DR from previous post (Binance, Coinbase and Kraken)

• Kraken and Coinbase acknowledge that assets belong to users
• Binance does not say anything on ownership (at least not that I could find)
• I only found insurance information on Coinbase: all balance held in USD (fiat) is insured by default and up to $250,000, or up to $1M dollars for assets in fiat and crypto for Coinbase One users

I was not expecting to see any kind of insurance at all, and am surprised with Coinbase's take on that. Binance was the one with the less amount of information on these topics (at least per my research).

I'm not sure to what extent the assets would still be considered users' property in the case of a bankruptcy filing, though.

Exchanges can change their ToS at anytime, so avoid leaving funds there for longer.

Use exchanges as exchanges. Buy a cold wallet and leave your funds there.

EDIT: nice table summary by user Maleficent_Plankton:

​

​