Judge Dismisses Case Against Gemini in $36 Million Crypto Theft Lawsuit

Gemini cryptocurrency exchange has settled its fraud-related lawsuit with

IRA Financial Trust, concluding a dispute over the theft of $36 million from IRA’s crypto fund.

Points

• Gemini settles lawsuit with IRA Financial Trust over $36 million crypto theft.
• The case was dismissed with prejudice, preventing re-litigation.
• The dispute centered around security protocol misrepresentation.

Gemini cryptocurrency exchange has settled its fraud-related lawsuit with IRA Financial Trust, bringing an end to a dispute that began nearly two years ago following the theft of $36 million from IRA’s crypto fund.

On July 18, Judge Analisa Torres dismissed the case between IRA Financial Trust and Gemini Trust. According to court documents seen by BeInCrypto, the judge dismissed the case with prejudice, meaning it cannot be re-litigated. This resolution signifies the end of a contentious legal battle that has lasted over a year.

“It is hereby stipulated and agreed by and between the parties and/or their respective counsel（s） that the above-captioned action is voluntarily dismissed, with prejudice against the defendant（s） Gemini Trust Company, LLC,” the filing stated.

Although specific details of the settlement remain undisclosed, this agreement concludes the dispute. In June 2022, IRA Financial Trust sued Gemini, alleging misrepresentation of security protections. IRA accused Gemini of lacking transparency regarding its security protocols, which led to the theft of $36 million from its customer funds in February 2022.

At the time, IRA Financial Trust claimed that Gemini never explained the critical nature of the master key. The South Dakota Trust company alleged that the crypto exchange treated it as mundane information, exchanging unsecured, unencrypted emails containing the master key. This allowed hackers to gain control of the master key, transferring millions in crypto, including Bitcoin and Ethereum, from multiple individual accounts to a single retirement account before making withdrawals.

“IRA Financial filed this lawsuit because, contrary to Gemini’s many public statements about how it prioritizes security, Gemini’s platform inexplicably had a single point of failure that allowed criminals to steal tens of millions of dollars of crypto assets from customer retirement accounts,” IRA’s lawyers stated.

Gemini denied any wrongdoing, asserting that it processed legitimate and authorized transactions from the IRA account. This settlement marks another step in Gemini’s efforts to resolve its various legal challenges. Recently, the exchange agreed to pay over $80 million to the New York authorities regarding its defunct Gemini Earn investment program. This includes a $50 million settlement with the Attorney General’s office and a $37 million fine to the New York State Department of Financial Services.

解説

• Settlement Implications: The settlement with IRA Financial Trust and the case dismissal with prejudice signify a crucial resolution for Gemini, allowing the exchange to move forward without the threat of re-litigation.
• Security Protocols: The lawsuit highlighted critical issues around security protocol transparency and the importance of robust security measures in protecting customer assets.
• Broader Impact: This case underscores the necessity for cryptocurrency exchanges to prioritize security and transparency. The settlement and dismissal of the lawsuit may also influence how other exchanges manage and communicate their security protocols to avoid similar disputes.