Published On: Tue, Jun 22nd, 2021

Israeli Cybersecurity Startup Fireblocks Sued Over $75 Million Loss

Cryptocurrency company StakeHound filed the law suit.

Fireblocks co-founders Idan Ofrat (from right), Michael Shaulov and Pavel Berengoltz (PR Pic)

Fireblocks is an Israeli fintech startup which specializes in cybersecurity. The company’s technology currently secures more than $400 billion in virtual assets. Now Calcalist has reported exclusively that Fireblocks is being sued over the loss of $75 million of the cryptocurrency Ethereum, ETH.

Cryptocurrency company StakeHound filed the law suit in Tel Aviv District Court. The suit alleges that StakeHound lost NIS 245.5 million (approximately $75 million) in cryptocurrency held for the firm by Fireblocks. StakeHound asserts in the suit that Fireblocks is guilty of negligence and is therefore responsible for reimbursing the company for its losses. The lost funds are said to be not recoverable.

Fireblocks has responded that StakeHound is to blame for their losses. In a statement Fireblocks said that, “The keys were generated by the client [StakeHound] and stored outside the Fireblocks platform.” Fireblocks asserts that StakeHound, “did not store the backup with a third-party service provider per our guidelines.”

But the lawsuit asserts that the loss was caused by, “human error committed by an employee of the defendants, who worked in an unsuitable work environment, did not protect or back up the defendant’s private keys needed to open the relevant digital wallet, and for no apparent reason, the keys were deleted, preventing the plaintiff’s digital assets from being accessed.”

Fireblocks states that its tech streamlines operations by bringing a user’s exchanges, OTCs, counterparties, hot wallets, and custodians into one platform. Wallets, deposit addresses, and API credentials are secured using patent-pending chip isolation technology and the newest breakthrough in cryptography (MPC). Institutions are using Fireblocks to move funds securely in seconds – instead of hours, says the firm.

The company boasts that with the Fireblocks DeFi API and Browser Extension users can now securely access the full range of DeFi protocols for strategies like decentralized exchange (DEX) trading, lending/borrowing, staking, and yield farming.

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