Bitcoin IRAs (individual retirement accounts) seemed like a simple concept to investors, particularly those accustomed to other types of retirement plans. So simple in fact that, in March 2021, as bitcoin surpassed $50,000, the eponymously named company Bitcoin IRA bragged about cresting 100,000 clients.
And it soon expanded beyond its bitcoin namesake. By the end of the year it also allowed clients to buy ether, litecoin, bitcoin cash, stellar lumens, zcash, and even non-crypto assets like gold.
Indeed, today Bitcoin IRA boasts that clients can invest in more than 60 crypto assets and various non-crypto assets.
However, despite the rapid growth and big claims made, there are a few signs that not everything is going brilliantly for Bitcoin IRA.
Its website’s ‘Earn’ page, which promised investors up to 6% interest on the cash and crypto in their retirement fund, is also no longer active. Not only this, it looks to have deleted a number of eyebrow-raising disclosures.
This is in addition to Bitcoin IRA becoming embroiled in a number of legal battles started by customers who alleged deceptive practices. It has also fielded complaints of poor customer service and even missing funds.
Bitcoin IRA and Kingdom Trust do battle in court
In August 2019, Bitcoin IRA and its affiliate, Digital IRA, entered into a legal battle with custodian and trust company, Kingdom Trust. Bitcoin IRA alleged that Kingdom Trust prevented clients from transferring their retirement accounts to its own custodian, BitGo.
For its part, Kingdom Trust had filed a lawsuit against Digital IRA and Bitcoin IRA just a few days prior. In the suit, Kingdom Trust alleged that Bitcoin IRA stole trade secrets belonging to it and conspired to deceive its clients.
Kingdom Trust had planned to merge with BitGo in January 2018. The lawsuit alleges that it shared information and secrets, including lists of customers and internal policies and procedures with BitGo as part of its preparations for the merger. However, BitGo terminated the deal in May 2018.
A year later, in May 2019, BitGo Trust forged a third-party administrator engagement agreement with Digital IRA. Kingdom Trust alleges that BitGo shared the confidential information with Digital IRA as part of a conspiracy to lure its clients away.
Read more: The crypto bets of a16z crumble, early investors still profit
Customer complaints mounting up
On June 22 this year, a Bitcoin IRA client complained about a 1% fee for making an in-kind transfer of assets to another IRA company. Bitcoin IRA claimed it had disclosed this 1% fee in an email. However, the client said it was a marketing email that customers could opt out of, making it useless from a legal standpoint. Ultimately, the client received a fee reimbursement.
On November 22, 2021, another customer alleged that Bitcoin IRA refused to process its requested transfer of assets to another IRA company. The customer requested the transfer in September 2021 and had a teleconference call with Bitcoin IRA on October 15, 2021.
Bitcoin IRA continued to give the client the run-around, claiming that the transfer was a complicated process or required sign-offs from various executives. After filing a complaint with the Better Business Bureau (BBB), Bitcoin IRA transferred the funds as requested.
Bitcoin IRA has a two-star rating from four reviews officially filed with the BBB. Its negative reviews complained of lost funds, poor handling of documentation, or deceptive marketing of an alleged ‘free’ account that didn’t exist.
Bitcoin IRAs sound like a good idea in principle. Individuals with a retirement account can add digital assets to it. However, it’s not bitcoin-only and as a company, Bitcoin IRA doesn’t look so impressive when we factor in the allegations of stealing other companies’ confidential information, engaging in deceptive marketing practices, and mistreating customers.
For more informed news, follow us on Twitter and Google News or listen to our investigative podcast Innovated: Blockchain City.