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Fireblocks faces lawsuit from StakeHound over loss of $75 million worth of ETH

  • StakeHound has filed case against Fireblocks regarding the loss of 38, 178 ETH.
  • Fireblocks said it is not responsible for losing.


Liquid staking provider StakeHound has filed a lawsuit against crypto-custody firm Fireblocks over the loss of Ethereum (ETH), worth nearly $75 million. StakeHound claimed it entrusted Fireblocks with the ETH and added the crypto-custody company locked it from the wallet containing the cryptocurrency. The wallet had 38, 178 ETH coins.

StakeHound blames Fireblocks to get loss of access to ETH coins

According to the lawsuit submitted on the 22nd of 06, StakeHound said that the ETH loss resulted from Fireblocks’ negligence. The suit has been filed at the Tel Aviv District Court by three Gornitzky & Co. lawyer attorneys – Eli Cohen, Alex Feldsher, and Nuna Lerner. The crypto resource cannot be recovered because there is no backup available. StakeHound blamed the whole event on an employee of Fireblocks who did not back up the private tips to the digital wallet. Without backup, the private keys were deleted, and StakeHound lost access to its property.

StakeHound complained about the reduction:

This is a human error committed by an employee from the defendants, who worked in an unsuitable work environment, did not shield or back up the defendant’s private keys needed to open the relevant digital wallet, as well as for no apparent reason, the particular keys were deleted, preventing the plaintiff’s digital property from being accessed.

Also, StakeHound maintained which the case is not a “simple situation” of loss of personal keys. Instead, the company asserted that Fireblocks did not transfer its private tips to Coincover according to their particular agreement. StakeHound continued:

This resulted in a disaster and damage: The defendant irrevocably lost access to the plaintiff’s digital assets, which were deposited in an e-wallet provided by the defendant, causing the loss of 38, 178 of the plaintiff’s ETH coins.

Fireblocks denies StakeHound’s claims

However , Fireblocks has denied the allegations. The crypto-custody provider said that the private keys were generated by StakeHound and stored outside of the Fireblocks platform. In addition , Fireblocks said that StakeHound did not follow its guidelines in keeping the backup. Fireblocks mentioned that StakeHound did not save the backup with a third-party service provider according to the rules.

Coincover is the company in charge of backing up the private keys. When Coincover received the secrets, the company was unable to confirm if they could open the particular digital wallet due to the confidentiality agreement. Fireblocks needs to maintain a copy of the keys for verification during the recovery process.

Commenting on the lawsuit, Fireblocks CEO Michael Shaulov said that StakeHound’s claim is definitely entirely incorrect. In addition , the CEO said that StakeHound triggered the act of negligence. Speaking further, Shaulov described that Fireblocks has never lost wallet keys. He assured that all the company’s tips back up automatically and that the keys back up every 10 minutes in three locations.

Also, Fireblocks has customers that their funds are safe regardless of the recent incident. The company also said that it is currently investigating StakeHound’s ETH loss.

Fireblocks secured $133 million in a Round C collection funding led by Coatue and Ribbit in 03. Other participants in the funding were Tenaya Capital, Cyberstartes Ventures, Galaxy Digital, Paradigm, and Swisscom Ventures.

 

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