Gemini Crypto Exchange Caught In Legal Crosshairs Yet Again

Just three days after facing legal action from Commodity Futures Trading Commission (CFTC), another Gemini lawsuit is here again. This time, IRA, a platform for self-directed retirement and pension accounts, is suing Gemini.

On June 3, the CFTC alleged that IRA made misleading statements and omissions pertaining to a Bitcoin futures contract. Between July 2017 and December 2017, Gemini made false statements during evaluation of the self-certification of the contract.

Gemini Lawsuit On Theft of $36 million

The IRA Financial Trust filed a lawsuit against Gemini over an alleged theft of $36 million of crypto assets. In February 2022, the theft of assets in Gemini’s custody belonged to customer retirement accounts, it claimed.

“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.”

In the lawsuit, IRA alleges that Gemini did not have proper safeguards in place to protect customer crypto assets. It also claims that Gemini failed to freeze accounts within a sufficient timeframe immediately following the incident. This allowed the criminals to continue moving funds out of customers’ accounts after IRA notified Gemini, it added.

‘Gemini’s Transparency With Cybersecurity’

Pointing to Gemini’s alleged lack of transparency with its cybersecurity protocols, the lawsuit also blames the exchange’s API. The platform’s API was designed with only a single point of failure, IRA stated in the complaint.

“Gemini boasts of supposedly industry leading security protections, such as two-factor authentication, ‘whitelisting’ withdrawal addresses, and fraud detection algorithms. Gemini says that these protections, among others, ‘eliminate single points of failure.’”

Interestingly, IRA stated that Gemini’s detailed statements about its industry-leading focus on security were main reasons behind preferring the exchange.

The Winklevoss brothers, Cameron and Tyler, founders of the exchange, are yet to respond to this development. The exchange was in the news recently for laying off its employees. Gemini had last week announced it was cutting 10% of its workforce. The Winklevoss brothers wrote to the employees citing ‘crypto winter’ as one of the reasons behind the decision.

Anvesh is keen on writing about major announcements around crypto adoption by institutions and popular personalities. Having been associated with the cryptocurrency industry since 2016, his interest in this space helped pivot his journalism career to the blockchain ecosystem. Follow him on Twitter at @AnveshReddyEth and reach out to him at anvesh (at) coingape.com

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