StakeHound filed a lawsuit against Fireblocks over blocking a wallet with over 38 thousand ETH

The crypto staking platform StakeHound  filed a lawsuit against the Israeli digital asset custody, transfer and settlement platform Fireblocks for blocking its wallet containing a significant amount of the crypto assets.

On June 22, StakeHound filed a lawsuit with the Tel Aviv District Court, seeking damages for the lost assets. The blocked wallet had 38,178 ETH, which was more than $72 million at the time the lawsuit was filed.

StakeHound said a Fireblocks employee was allegedly unable to protect or back up the wallet’s private keys, which were subsequently deleted. Because of this, the access to StakeHound assets was blocked. StakeHound said in a statement:

“This is a human error committed by a defendant’s employee who worked in an inappropriate work environment. He did not protect or back up the responder’s private keys required to open the associated digital wallet. For no apparent reason, the keys were removed, which blocked access to the plaintiff’s digital assets. “

According to Israeli media reports, Coincover, the company responsible for backing up private keys, allegedly obtained the keys to the wallet, but was unable to verify their functionality due to a confidentiality agreement.

Fireblocks denies any negligence. The company said that the private keys were generated by the client and stored off the platform. Fireblocks also noted that all customers are encouraged to keep a backup with a third-party service provider, which the plaintiff apparently did not do.

The statement on Fireblocks website says the company partnered with a request from StakeHound in December 2020 to create a set of “BLS key stakes.” This set of stakes is associated with the staking project ETH 2.0. BLS (Boneh – Lynn – Shacham). BLS is a cryptographic signature scheme). This cryptographic signature allows the user to verify the identity of the signer.

On April 29, the Fireblocks team ran a regularly scheduled disaster recovery drill. The company then discovered that the set of BLS key segments from the backup could not be decrypted. Thus, the company concluded that StakeHound never backed up BLS keys.

Recently, co-founder of Apple Inc. Steve Wozniak lost a lawsuit against YouTube for distributing fraudulent videos by video hosting. The fraudulent videos portrayed Wozniak as the organizer of the prize draw. The video promised people who would send Bitcoins to double their contribution.

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