IRA Financial Trust has sued Gemini crypto exchange over a $36M crypto assets exploit from users’ accounts earlier in February.
On Monday, IRA Financial Trust, a platform that offers self-directed digital asset retirement and pension funds, sued cryptocurrency exchange Gemini for allegedly failing to protect consumers’ digital assets during a critical vulnerability.
Gemini was in charge of the firm’s client accounts. Unauthorized withdrawals of $36 million in crypto assets from users’ accounts were made on February 8 as a result of a hack.
Since then, both companies have accused each other of the money’s disappearance. To make matters worse, an allegedly bogus 911 call occurred at the same time as the hack, causing several IRA Financial Trust personnel to be diverted from their work.
Gemini has several security mechanisms, including as two-factor authentication, whitelisting withdrawal addresses, and fraud detection algorithms, to avoid single points of failure in its security systems.
IRA Financial Trust, on the other hand, claimed that Gemini’s API systems had a single point of failure. According to the firm, clients’ accounts had a mastery key that allowed them to overcome all built-in security safeguards. The release merely stated, “Hackers were able to get possession of IRA’s master key by committing crimes.”
One theory is that the breach was triggered by a series of allegedly unencrypted, unsecured e-mail conversations between Gemini and IRA Financial Trust.
IRA Financial Trust denies being told of the “master key’s” power by Gemini in the first place. The complaint was filed less than a month after the two parties sought to reach an out-of-court settlement.
Gemini representatives informed Cointelegraph, “The lawsuit’s assertions are false. Our security standards are among the industry’s finest, and we keep them up to date to ensure that our consumers are always safe.
In this case, we acted immediately once IRA Financial informed us of their security breach to prevent the loss of assets from their accounts.”