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- Fireblock is facing charges by StakeHound for not backing up private wallet keys
- Firm denies mishandling and assures no mistake from their end
- StakeHound blames the custodian firm’s employee for not backing up the private key
Cryptocurrency is a very sensitive type of digital asset. Crypto follows a decentralized system of data and transaction management and there are no fatalities or frauds while conducting a transaction but storing crypto assets can be extremely delicate. Without any backup of the credentials of an investor’s crypto-storing account, the investor could lose a bucket load of their assets and this is what happened with Fireblock. The crypto-storing firm claims to be under a lawsuit charged by a firm that stakes on cryptocurrency.
Fireblock allegedly blocks a crypto wallet because of no back up
StakeHound, a tokenized staking platform that uses Proof of Stake tokens facilitated by Ethereum’s decentralized Finance system, claims Fireblock, a crypto asset storer, to allegedly lock them out of their wallet account. Apparent neglect by a Fireblock employee led to a loss of tens of million dollars worth of Ether. The lawsuit filed by StakeHound against Fireblock occurred on the 22nd June in the Tel Aviv District Court of Israel as Fireblock is based in Israel. The lost assets in the lawsuit frame comprised 38,178 Ether, amounting to almost $72 million on that day.
Fireblock says that it has previously handled Fireblock’s requests for creation of creating ‘BLS key shares in the year 2020 and cooperated with the firm in full confidence. However, in the month of April 2021, the company conducted a routine drill that suggested the customer had not backed up private keys and hence some of the ‘BLS key shares’ could not be decrypted by them.
StakeHound puts the blame on a Fireblock employee
The crypto staking forum, StakeHound claims direct carelessness on the part of a Fireblock employee which resulted in the following lawsuit. StakeHound proclaims that it is left with no backup of these lost crypto assets. The employee responsible for backing up the data failed to do so and now StakeHound has no access to its wallet. According to Fireblock, private keys are generated by the clients and there are no regulations of backing up that private key. The crypto asset holding firm denies any kind of error on their side and blames the customer for departing with their private key that was created by the client itself.
An Israeli report suggested that Coincover, an insurance backed cryptocurrency protection platform, received regular key updates from StakeHound. Whether the company can have access to the wallet again is yet to be disclosed by Coincover because of confidentiality.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
