Fireblocks sued for alleged loss of 38,178 ETH

by in Cryptocurrency News

Lawsuit

Swiss staking platform StakeHound has blamed the loss of funds for institutional-focused infrastructure company Fireblocks. The lawsuit was filed in the Tel Aviv District Court.

Founded in 2017, Fireblocks used multi-party computation (MPC) to store private keys. To improve security, she provided backups to Coincover.

According to the complaint, as a result of negligence, the defendant lost the private keys of StakeHound users. Coincover employees allegedly received incorrect data - they could not verify their correctness at the first stage due to a confidentiality agreement.

The plaintiff estimated the damage at approximately 38,178 ETH (~ $ 68 million at the time of writing).

Blockchain developer Lior Yaffe, in a comment to Decrypt, suggested that errors in the MPC creation process were the cause.

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“As a result, the wrong deposit address was received,” he explained. According to the expert, in this case, even a backup using Coincover would not have saved.

“What's harder to understand is why the recovery process was not tested on a small amount before that amount of ETH was blocked, or, if it was tested earlier, which crashed later,” Jaffe said.

According to Fireblocks, the Stakehound project was managed off-platform and the client did not keep a backup with a third-party vendor as recommended.

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“The Fireblocks team is working hard to help all parties involved in restoring access to ETH,” the post said.

In 2019, the company raised $ 16 million from venture capital firm Tenaya Capital, Cyberstarts fund, and a division of Fidelity International.