IRA Financial Trust Brings Lawsuit Against Gemini Trust Company Alleging Crypto Exchange Security Failures 

Key Takeaways: 

  • Gemini has been accused of misleading its customers with heightened promises about providing better protection. 
  • IRA has mocked Gemini of failing to detect a massive hack on time. 

Security related to digital assets is a matter of major concern for consumers. Scams and hacks are an everyday sight in the space and are scaring away investors. In this tough situation, users trust reputed crypto exchanges to provide them with the utmost protection. 

However, recently, IRA Financial Trust has blamed cryptocurrency exchange Gemini Trust Company for the February 8, 2022 hack where the former lost $36 million. During the hack almost $15 million in Ethereum and $21 million in Bitcoin from retirement accounts. The IRA claimed that Gemini “failed to freeze accounts within a sufficient time frame immediately following the incident.” 

In the press release, the IRA has raised allegations against Gemini. It is stated that though Gemini boasts of its security protections as one of the best in the industry, its API is designed with a single point of failure, but it provided IRA with a ‘master key’, which gave IRA the right to bypass all security protections. 

However, the latter says that, “Critically, Gemini never informed IRA about the power of this master key. To the contrary, Gemini itself handled IRA’s master key as if it was a mundane piece of information, repeatedly exchanging unsecured, unencrypted emails with IRA containing the master key.” 

IRA has also accused Gemini of falsely claiming about facilities like two-factor authentication, and detection of prohibited transfers using anti-fraud systems. They have also mentioned that, “Amazingly, it was IRA that had to alert Gemini—the so-called leader in safeguarding crypto-assets—of the obvious fraud occurring on Gemini’s platform.” 

IRA is working toward reimbursing affected customers and has filed a lawsuit to disclose Gemini’s false claims about prioritizing security, and promising features that it does not possess. The former will be attempting to prove its claims about Gemini in court. 

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Shreya Bhattacharya

A journalist & writer exploring new topics every day!

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