DigitalIRA.com (Digital IRA) and its affiliate Alternative IRA Services (Bitcoin IRA) have filed a legal action against the companies’ contracted cryptocurrency custodian, The Kingdom Trust Company (Kingdom Trust), for allegedly obstructing Digital IRA clients from transferring their retirement accounts to competitor BitGo Trust. The filing comes a few days after Kingdom Trust filed its own lawsuit against Digital IRA, Bitcoin IRA and qualified custodian BitGo.
Investing in Cryptocurrency IRAs
Digital IRA is an account service provider that facilitates the purchase, sale and delivery of cryptocurrency assets on behalf of its clients relative to their self-directed Individual Retirement Accounts (IRA), or 401k accounts.
The company allows customers to invest in several different cryptocurrencies, including bitcoin, ether and litecoin, and to manage their IRA through its Bitcoin IRA online platform. Digital IRA is not a custodian, nor is Bitcoin IRA, but instead it’s a middleman that connects its customers to qualified services providers.
Bitcoin IRA, which says that it signed a referral agreement with Kingdom Trust on September 5, 2018, claims in a complaint filed on August 26, 2019, and obtained by Bitcoin Magazine, that Kingdom Trust has intentionally “delayed and obstructed its account holders’ requests to transfer IRA assets to Digital IRA in order to penalize the account holders, continue charging account holders monthly fees during the period of delay and intentionally cause harm to Digital IRA as a competitor.”
Bitcoin IRA alleges Kingdom Trust “has engaged in numerous unfair and deceptive bad faith business practices to penalize those account holders and prevent the transfers from occurring,” including delaying transfers for weeks or months by repeatedly instructing account holders to submit new and different forms, requiring them to make transfer requests by phone call to then place them on hold for 45 to 60 minutes, and engaging in “aggressive sales tactics to intimidate account holders to rescind their transfer requests.”
From Digital IRA to BitGo
Since June 2019, over 800 Kingdom Trust account holders who are clients of Digital IRA have requested that their retirement accounts be transferred “in-kind” (meaning without liquidating the assets and distributing the proceeds) from Kingdom Trust to rival BitGo Trust, a South Dakota qualified custodian, the suit says.
The complaint also says that Kingdom Trust has sent an email to Digital IRA and Bitcoin IRA’s customers in which the company “intentionally made multiple false defamatory statements regarding Digital IRA and Bitcoin IRA” to justify discontinuing its relationship with Bitcoin IRA, including “falsely claiming that there were ‘multiple reasons for this termination, all of which revolve around the security of our clients and their assets.’”
These “unfair, deceptive, and obstructive business practices” were “designed and intended to cause injury” and have led to “a substantial loss of revenue to Digital IRA,” the complaint says.
Kingdom Trust vs. BitGo
The suit was filed just a few days after Kingdom Trust filed a civil lawsuit of its own against DigitalIRA.com, Alternative IRA Services and their shared CEO, Camilo Concha, and COO, Chris Kline, as well as BitGo and its cryptocurrency custodial affiliate company BitGo Trust.
In the complaint, filed on August 22, 2019, and obtained by Bitcoin Magazine, Kingdom Trust alleges that the companies “improperly obtained Kingdom Trust’s trade secrets” and conspired to “deceive and misappropriate Kingdom Trust clients.”
Kingdom Trust entered into an agreement and plan of merger with BitGo on January 11, 2018, and during the premerger months, it says it had “share[d] company trade secrets with BitGo such as customer lists, policies and procedures, management and marketing strategies, regulatory programs, and other proprietary and confidential information.”
“After receiving extensive proprietary information from Kingdom Trust, BitGo terminated the merger agreement in May 2018,” the complaint says.
Digital IRA and its parent company Digital Asset Group entered into a third-party administrator engagement agreement with BitGo Trust in May 2019, unbeknownst to Kingdom Trust.
Bitcoin IRA, Digital IRA, BitGo and BitGo Trust “colluded and agreed with one another to commit the wrongful acts … to wrongfully and fraudulently convert Kingdom Trust’s clients,” the complaint says.
The suit brings several causes of action, including violation of trade secrets acts, trademark infringement, tortious interference with contractual relations, defamation, unfair competition, conspiracy and breach of contract.
A BitGo spokesperson said in a statement sent to Bitcoin Magazine that the company “do[es] not comment on pending litigation. However, we are confident that when the facts come to light through the judicial process it will be clear that BitGo has committed absolutely no wrongdoing.”
Digital IRA/Bitcoin IRA declined to comment on the ongoing legal disputes.
Bitcoin Magazine reached out to Kingdom Trust for comment but did not receive a response in time for publication.
Diana Ngo is a freelance fintech, blockchain news writer based in Ho Chi Minh City, Vietnam. She has worked for French- and English-language online publications covering disruptive technologies and innovative startups that are reinventing the financial services industry. She studied economics and international business at IAE of Lyon, in France, and holds a bachelor’s degree in Applied Economics from the Jean Moulin University Lyon 3.