IRA Financial Trust Files Lawsuit against Gemini for $36m Crypto Hack
Nicholas Otieno Jun 07, 2022 07:40
IRA Financial Trust said it has filed a lawsuit against Gemini crypto exchange for its alleged role in breaching customers’ retirement accounts.
IRA Financial Trust (IRA), a major platform for self-directed retirement and pension accounts, announced on Monday that it has filed a lawsuit against Gemini crypto exchange for its alleged role in the breach of customers’ retirement accounts.
The institution has been providing its customers with exposure to cryptocurrency via integration with the Gemini exchange. In February, $36 million worth of cryptocurrencies – $21 million of Bitcoin and $15 million in Ethereum – were stolen through a hack in Gemini’s custody belonging to IRA’s customers’ retirement accounts.
Customers who lost their funds in the IRA Financial Trust-Gemini financial security breach have been eager to know the whereabouts of their funds.
Since the incident happened, IRA Financial has been working to find solutions for its affected clients. In its lawsuit announced on Monday, the firm alleged that Gemini’s systems were responsible for the hack.
IRA Financial claimed that the Gemini crypto exchange platform did not have proper safeguards in place to protect customer crypto funds. The lawsuit also stated that Gemini failed to freeze accounts within a sufficient timeframe immediately after the incident, allowing the criminals to continue withdrawing funds from customers’ accounts on the Gemini platform after the IRA notified Gemini.
The lawsuit further alleged that Gemini lacked transparency with its cybersecurity protocol and highlighted that the Gemini crypto exchange platform relied on a “faulty” API, which “included a single point of failure.”
Scammers Targeting Personal Investment Apps
Individual retirement accounts (IRAs) are tax-advantaged savings instruments for U.S. workers, who can deduct their contributions from their income. While IRAs don’t allow crypto investments, they normally allow for investments in mutual funds, bonds, and stocks.
That’s how IRA Financial came in and started providing customers with an easy way to make retirement investments in cryptocurrency via its app, which it has linked to Gemini.
The recent financial security breach has triggered anxiety among investors. IRA Financial Trust, a platform offering self-directed retirement accounts with cryptocurrency investments, was hacked on February 8 this year.
The stolen funds were laundered through a “mixer” service known as a tornado, which helps keep crypto transactions anonymous.
While the hack indeed happened, Gemini distanced itself from the incident. Gemini clarified through its statement that they were not breached, though IRA Financial Trust’s accounts are serviced via the Gemini platform.
Gemini defended itself, stating that it does not manage the security of IRA Financial’s systems. The two security systems are independent of each other.
Both Gemini and IRA Financial are facing a class-action lawsuit from customers impacted by the breach.
The missing funds raise financial security concerns for investors regarding Bitcoin and crypto investments. Investors are urged to take caution against crypto investment scams and avoid fraudsters looking to capitalize on the latest investment trends.
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