In brief
- IRA Financial Trust lost $36 million in crypto in a February hack.
- The company uses New York-based crypto exchange Gemini to hold its digital assets.
- It alleges that Gemini "did not have proper safeguards in place to protect customer crypto assets"—and wants to sue the exchange.
IRA Financial Trust, a company which manages individual retirement accounts in non-traditional assets such as Bitcoin, today announced a lawsuit against cryptocurrency exchange Gemini.
IRA Financial was hacked for $36 million-worth of crypto back in February. Criminals stole $21 million in Bitcoin and $15 million in Ethereum from retirement accounts in the hack.
IRA uses Gemini's platform to hold cryptocurrencies and it alleges that the New York-based exchange's systems were to blame because it "failed to freeze accounts within a sufficient time frame immediately following the incident."
"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," the announcement today said.
"IRA Financial Trust has been working to find 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," it added.
Gemini responded to the allegations in a statement provided to 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 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."
Miami-based IRA Financial manages individual retirement accounts—tax-advantaged savings instruments for U.S. workers, who can deduct their contributions from their income.
Gemini is a popular exchange run by billionaire brothers Cameron and Tyler Winklevoss. The two are famous in the crypto world because of their relatively early Bitcoin investment that made them billions.
But Gemini has had a string of bad luck lately: the Commodity Futures Trading Commission (CFTC) last week filed a complaint against the exchange, alleging that it misled regulators "for making material false or misleading statements" in an effort to gain approval for its Bitcoin futures product.
And the exchange also announced this month that it was laying off 10% of staff in an effort to help the firm weather "crypto winter."