Gemini is being sued for allegedly providing IRA Financial with a single point of failure onboarding system that allowed the loss of $36 million in IRA customer funds. The exchange has also been accused of failing to freeze accounts quickly enough.
<h2>IRA Financial Trust (IRA) is Suing Gemini</h2>
The <a href="https://www.prnewswire.com/news-releases/ira-financial-trust-brings-lawsuit-against-gemini-trust-company-alleging-crypto-exchange-security-failures-301561916.html" target="_blank" rel="nofollow noopener">IRA Financial Trust</a> (IRA) is suing Gemini for the February 2022 hack, which resulted in the theft of $36 million from IRA customers' accounts at the cryptocurrency exchange. According to a press release, IRA, a U.S. platform for self-directed retirement and pension accounts, claims in the lawsuit that Gemini "did not have proper safeguards in place to protect customer crypto assets" and "failed to freeze accounts within a sufficient [time-frame]" after IRA alerted Gemini to the theft. Gemini is a New York-based cryptocurrency exchange. Tyler and Cameron Winklevoss co-founded it, and it is now one of the most popular stock exchanges in the United States.

According to IRA, Gemini insisted on using Gemini's application programming interface (API) to streamline customer onboarding while failing to disclose to IRA that the API contained a single point of failure, namely a master account controlled by a master-key under which "all of Gemini's IRA customers were sub-account holders."
<h2>Unencrypted Emails between Gemini and IRA</h2>
According to the lawsuit, the criminals allegedly obtained the master key from unencrypted emails between Gemini and IRA. To divert IRA employees' attention away from the heist, the hackers may have fraudulently reported kidnapping in IRA's South Dakota offices to the police department (who then dispatched a SWAT squad to the scene). They then combined the monies from all sub-accounts before extracting the total amount using the master key. Gemini's anti-fraud systems did not detect the transfers. The profits from the lawsuit against Gemini, according to IRA, will be used to reimburse IRA consumers.

A lawsuit has been filed against Gemini for the second time in less than a week. The Commodity Futures Trading Commission (<a href="https://www.cryptoknowmics.com/news/us-cftc-sues-gemini-crypto-exchange-over-a-bitcoin-futures-product/" target="_blank" rel="noopener">CFTC</a>) is also suing Gemini for making false or misleading representations during an evaluation in 2017 about its plans for a Bitcoin futures product.

IRA Financial Files Lawsuit Against Gemini Over $36M hack

IRA Financial has filed a lawsuit against Gemini for allegedly providing a single point of failure onboarding system; losing $36 million in IRA customer funds.

Usha is a diehard crypto enthusiast and has been actively writing on different facets of the blockchain and crypto world. She has authored many research articles on cryptocurrency and aims to provide informational and quality content to readers. She firmly believes that crypto has a great potential to redefine the world of finance and blockchain.

IRA Financial Files Lawsuit Against Gemini Over $36M hack

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