Gemini and IRA Financial Trust have recently come to an agreement regarding a lawsuit filed by IRA in 2022 due to security issues with Gemini’s platform. The lawsuit stemmed from a security breach where a hacker was able to access IRA’s master key on Gemini and steal funds from accounts belonging to senior citizens. IRA accused Gemini of having opaque security measures and a single point of failure that allowed the hacker to carry out the crime.
IRA had chosen Gemini as the exchange to secure customers’ crypto assets based on Gemini’s claims of industry-leading security measures. However, IRA alleged that Gemini pushed them to switch from using the web-based platform to the Gemini API, which ultimately led to the security breach. IRA claimed that Gemini’s API was designed with a single point of failure that allowed a bad actor to steal all crypto assets from customers.
After two years of legal battle, the United States District Court for the Southern District of New York dismissed the suit as both parties reached a settlement. However, the financial details of the agreement have not been disclosed to the public. This settlement comes after Gemini faced legal issues with the New York Department of Financial Services and the New York Attorney General’s Office for selling illegal securities through its ‘Earn’ program. The Attorney General was able to recover $50 million to be distributed to Earn users, and NYDFS demanded an additional $1.1 billion in compensation for Earn users from the exchange.
The resolution of the lawsuit between Gemini and IRA Financial Trust highlights the importance of implementing robust security measures in the cryptocurrency industry to protect investors and prevent security breaches. It also serves as a reminder for exchanges to be transparent about their security practices and to prioritize the safety of their users’ assets. Moving forward, it is crucial for exchanges to continuously update and improve their security protocols to prevent similar incidents from occurring in the future.