80% of Hacked Crypto Projects Never 'Fully Recover,' Expert Warns

Crypto crime remained a significant issue in 2025, with global losses reaching $6.75 billion. This figure highlights the challenges that crypto security faces, particularly in terms of insurability. Insurers remain cautious, as losses in digital assets are often irreversible once initiated.

Circuit's new Response system is addressing this challenge. The system operates in under two seconds, detecting suspicious activity and moving assets to safety. This approach is aimed at providing a layer of containment that has been missing in traditional crypto security models.

Lloyd's, a major insurance marketplace, has taken notice of Circuit's efforts. The company recently completed the Lloyd's Lab Accelerator and received backing from the Lloyd's Central Fund. This support suggests a growing interest in redefining how crypto risk is priced.

Why the Move Happened

Traditional financial systems have mechanisms to contain losses, such as transaction holds and fraud detection. In contrast, crypto systems often lack these tools. Once a transaction is initiated, it is difficult to stop, which makes it hard for insurers to measure and mitigate risk.

Circuit's Response system introduces a new approach by focusing on real-time containment. It uses preauthorized fallback transactions to move assets quickly. This model has the potential to provide measurable outcomes, such as response success rates and recovery probabilities, which are critical for underwriting.

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The response from the insurance market has been cautious but encouraging. Lloyd's has shown interest in Circuit's approach, signaling a potential shift in how crypto risk is assessed. Insurers are looking for sustained evidence that losses can be meaningfully bounded rather than just theoretically reduced.

For institutions using Circuit's system, there is the possibility of insurance premium reductions of up to 15 percent. This reduction is not the main benefit, but the data generated can help insurers understand risk more clearly.

What Analysts Are Watching

Skeptics remain unconvinced that real-time containment fully solves the insurance problem. Critics argue that attack detection is imperfect, and response mechanisms may fail under adverse conditions. Blockchain finality varies, and sophisticated attackers may outpace automated defenses.

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Competitors are exploring other angles to reduce risk. Custody providers such as Fireblocks and BitGo focus on reducing attack likelihood through governance and access controls. Monitoring firms emphasize faster detection and intelligence sharing. None, however, offer native onchain containment once a transaction is in motion.

Crypto security is evolving from prevention-focused models to ones that prioritize survivability. If losses can be measured and contained, the insurance market may finally find a foundation it can work with. This shift is essential for crypto to scale institutionally, as failure must be survivable.