IRA Financial Trust sues Gemini for stealing crypto assets in February

IMPORTANT POINTS

  • The lawsuit follows Gemini’s theft of $36 million in IRA client funds
  • The IRA alleges Gemini had weak security which led to the theft
  • Gemini is facing a separate lawsuit over a Bitcoin project from US regulators

The IRA Financial Trust (IRA), a platform for self-managed retirement and retirement accounts, has filed a lawsuit against cryptocurrency exchange and custodian Gemini for stealing $36 million worth of crypto assets belonging to retirement accounts stored there his clients included the custody of the exchange.

The IRA said it is working on a solution for affected customers and plans to pawn the proceeds of the lawsuit to compensate its customers who lost their money as a result of the February 8 theft.

According to the investigation conducted by CoinDesk and testimonies from the victims of the theft, the victims put strict restrictions on their accounts, including whitelisting of payout addresses, two-factor authentication, email notifications, and other steps. Gemini had allegedly refused to take responsibility, blaming the IRA Financial Trust for the theft.

The FBI is currently investigating the case, an official told CoinDesk.

Interestingly, officers were responding to reports of an alleged “raid” at the IRA’s office in Sioux Falls, South Dakota, on the day the cybertheft took place, Coindesk citing a victim recounted by a detective on February 15 . They found no robbery, and deemed it a “swatting” incident. But when IRA staff returned to the desk, they found client accounts being hacked and money being actively withdrawn, the report said.

The IRA claimed in a statement that the exchange did not have adequate security features to protect customers’ crypto assets, which led to the theft. Gemini Trust Company was founded by the Winklevoss twins. The exchange is facing a separate lawsuit filed by the Commodity Futures Trading Commission for allegedly providing misleading answers about a Bitcoin project in 2017.

“The lawsuit also alleges that Gemini failed to freeze accounts within a sufficient timeframe immediately after the incident to allow the criminals to continue moving funds from customer accounts on the Gemini exchange after the IRA notified Gemini,” IRA said.

The IRA Financial Trust also claimed that “Gemini put severe pressure on the IRA to switch from using Gemini’s web-based platform to the Gemini API — an application programming interface — which Gemini said would streamline the customer onboarding process.” , the API was allegedly “developed with only a single point of failure”.

The IRA Financial Trust alleges in the lawsuit that Gemini allowed the theft and “contrary to its claims, it did not detect it using anti-fraud crypto assets — the apparent fraud occurring on Gemini’s platform.”

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