Cryptocurrency IRA Financial Trust believes that crypto exchange Gemini is to blame for the massive February hack. Gemini disagrees with the allegations.
IRA Financial Trust, which functions as a traditional retirement fund management firm, but instead of investing in traditional assets, trades in digital assets, like Bitcoin, announced earlier this week that they will open a lawsuit suing exchange Gemini.
In February, IRA Financial was hacked through the exchange and lost $36 million worth of crypto. The hackers stole roughly $21 million in Bitcoin and $15 million in Ethereum from their clients’ retirement funds.
The lawsuit comes as the trust alleges that Gemini’s exchange’s systems “failed to freeze accounts within a sufficient time frame immediately following the incident.”
The announcement said, “As stated in the complaint, the lawsuit, IRA Financial Trust v. Gemini Trust Company, LLC, alleges that the Gemini cryptocurrency exchange platform did not have proper safeguards in place to protect customer crypto assets.”
In addition, “IRA Financial Trust has been working to find a resolution for its impacted customers since this incident occurred and is pledging to use the proceeds from the lawsuit to reimburse IRA Financial customers impacted by the February 8, 2022, incident.”
Gemini responded to Financial’s allegation in a statement given to crypto news source Decrypt, “We reject the allegations in the lawsuit. Our security standards are among the highest in the industry and we are constantly updating them to ensure that our customers are always protected. In this matter, as soon as IRA Financial notified us of their security incident, we acted quickly to mitigate the loss of funds from their accounts.”
IRA Financial manages individual retirement accounts– tax-advantaged savings instruments for U.S. workers, who can deduct their contributions from their income.
The Winklevoss twins manage the Gemini exchange and are relatively famous in the cryptocurrency world as they were early achieved investment success in the blockchain industry.
Gemini is being hurt by lawsuits from IRA Financial but also by the allegations from the Commodity Futures Trading Commission (CFTC) that allege the company misleads regulators: “for making material false or misleading statements” in an effort to gain approval for its Bitcoin futures product.
The exchange also announced earlier this month that they were laying off 10% of their company in response to the negative market conditions.