StakeHound Files Lawsuit Against Fireblocks Over $ 72 Million ETH Wallet Private Key Issue

The custodian of the cryptocurrency Fireblocks is facing legal action by another company because it does not have access to its wallet with large amounts of crypto.

Crypto staking platform StakeHound says the negligence of Fireblocks employees resulted in them losing tens of millions of dollars worth of crypto assets with no backups. Fireblocks is an Israel-based company that provides corporate custody services and works to accelerate digital transactions.

StakeHound filed a lawsuit in Tel Aviv District Court on June 22, seeking compensation for the lost items. The wallet in question contained 38,178 ETH, or more than $ 72 million at the time.

According to the lawsuit, a Fireblocks employee was unable to backup or secure the private keys to open the wallet, and the keys were subsequently deleted, leaving StakeHound inaccessible to its assets. In a statement, StakeHound claimed:

“This is a human error, especially by an employee of the defendant. This person failed to do their job properly, the private keys required to open the relevant e-wallet were not protected or secured, and the keys were deleted for no apparent reason so that the plaintiff had no access to his assets “.

According to the news According to the Israeli media, the company Coincover is entrusted with securing private keys that are said to have received the keys, but cannot check whether the wallet can be opened due to the confidentiality agreement.

Fireblocks has denied any negligence and stated that the private keys are generated by the customer and stored off-site. At the same time, they added that “the customer did not save the backup with the third party according to our instructions”.

In one to explain On its website, Fireblocks states that it partnered with StakeHound in December 2020 to create a series of “BLS Key Fragments” related to the ETH 2.0 stakeout project. BLS is a Boneh-Lynn-Shacham cryptographic scheme that enables users to verify the correct signer.

On April 29th, the Fireblocks team was conducting a regularly scheduled disaster recovery exercise and discovered that the BLS key fragments could not be decrypted from the backup.

“No keys produced by Fireblocks are affected and all Fireblocks customer funds are secure. Customer keys are backed up and can be restored, ”the statement read, adding that the situation is being actively investigated pending a response from the court.

Minh Anh

According to Cointelegraph

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