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Fireblocks threatens lawsuit for deleted keys for ether wallet valued at 72 million US dollars

June 23, 2021 - Around 2 mins mins to read

Cryptocurrency custody firm Fireblocks is facing legal action by a company that claims it has been locked out of its wallet containing a significant amount of crypto assets.

Crypto staking platform StakeHound claims that the negligence of Fireblocks employees resulted in tens of millions of dollars worth of crypto assets being lost with no backups. Fireblocks is an Israel-based company that provides corporate custody services and works to expedite 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.

The court was told that a Fireblocks employee allegedly failed to protect or secure private keys on a wallet that were subsequently deleted, preventing StakeHound from accessing its assets. In a statement, StakeHound stated:

“This was a human error caused by a Defendant employee working in an inappropriately working environment failing to protect or secure the Defendant’s private keys required to open the wallet in order to access it to prevent the plaintiff’s digital assets “,

According to a report in Israeli media, the company commissioned by Coincover to secure private keys is said to have received the keys, but due to the confidentiality agreement, they were unable to check whether they could open the wallet.

Connected: The cryptocurrency startup Fireblocks has raised a $ 133 million financing round with BNY Mellon

Fireblocks denied any negligence, saying the private keys were generated by the customer and stored off-site, adding that “the customer did not keep a backup with the service provider.” Third-party service as per our policies “.

In a statement on its website, Fireblocks further stated that it worked with a request from StakeHound in December 2020 to create a series of “BLS Major Stocks” related to the ETH 2.0 staking project. BLS is a Boneh-Lynn-Shacham cryptographic scheme that enables users to verify that the signer is authentic.

On April 29th, the Fireblocks team conducted a regularly scheduled disaster recovery exercise and discovered that a set of BLS key fragments from the backup could not be decrypted and concluded that the customer had never backed them up.

“No Fireblocks production keys are affected and all Fireblocks customer funds are secure and customer keys are secured and recoverable,” it said, adding that the situation is being actively investigated pending a response from the district court.

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Market

Fireblocks threatens lawsuit for deleted keys for ether wallet valued at 72 million US dollars

Cryptocurrency custody firm Fireblocks is facing legal action by a company that claims it has been locked out of its wallet containing a significant amount of crypto assets.

Crypto staking platform StakeHound claims that the negligence of Fireblocks employees resulted in tens of millions of dollars worth of crypto assets being lost with no backups. Fireblocks is an Israel-based company that provides corporate custody services and works to expedite 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.

The court was told that a Fireblocks employee allegedly failed to protect or secure private keys on a wallet that were subsequently deleted, preventing StakeHound from accessing its assets. In a statement, StakeHound stated:

“This was a human error caused by a Defendant employee working in an inappropriately working environment failing to protect or secure the Defendant’s private keys required to open the wallet in order to access it to prevent the plaintiff’s digital assets “,

According to a report in Israeli media, the company commissioned by Coincover to secure private keys is said to have received the keys, but due to the confidentiality agreement, they were unable to check whether they could open the wallet.

Connected: The cryptocurrency startup Fireblocks has raised a $ 133 million financing round with BNY Mellon

Fireblocks denied any negligence, saying the private keys were generated by the customer and stored off-site, adding that “the customer did not keep a backup with the service provider.” Third-party service as per our policies “.

In a statement on its website, Fireblocks further stated that it worked with a request from StakeHound in December 2020 to create a series of “BLS Major Stocks” related to the ETH 2.0 staking project. BLS is a Boneh-Lynn-Shacham cryptographic scheme that enables users to verify that the signer is authentic.

On April 29th, the Fireblocks team conducted a regularly scheduled disaster recovery exercise and discovered that a set of BLS key fragments from the backup could not be decrypted and concluded that the customer had never backed them up.

“No Fireblocks production keys are affected and all Fireblocks customer funds are secure and customer keys are secured and recoverable,” it said, adding that the situation is being actively investigated pending a response from the district court.

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