BitGrail founder ordered to reimburse $170 million worth of missing cryptocurrency

BitGrail founder Francesco Firano has been ordered by the Italian Bankruptcy Court to pay $170 million to reimburse the loss of customer funds

The Italian Bankruptcy Court has authorised the seizure of BitGrail founder Francesco Firano’s personal assets, ordering him to pay $170 million to reimburse the loss of customer cryptocurrency from the BitGrail exchange.

Mr Firano, known as “The Bomber,” owned and operated the BitGrail cryptocurrency exchange. Nearly a year ago, the exchange announced that it had lost 17 million Nano coins, approximately $170 million.

Leaked documents have been posted on Medium by the BitGrailVictimsGroup which highlight how the BitGrail website administrator had blocked users from withdrawing their cryptocurrencies.

The amount missing equated to 80% of the aggregate amount deposited on the platform.

Reportedly, the administrator informed users that they could recover ownership of the remaining 20% by “waiving any legal action against BitGrail and joining a repayment plan.”

Allegedly, in February 2018, Mr Firano discovered the missing funds and believed them to have been “illegally withdrawn by users who had exploited the vulnerability of the Nano software.”

The developers acknowledged the software flaws after initially denying them.

The ruling reveals: “The multiple requests were the result of BitGrail’s multiple requests sent to the Nano node, which had no knowledge of the exchange accounting system.”

In effect, the shortfall transpired because the users who stole the Nano capital discovered they could withdraw at specific times, which in turn gave them a chance to obtain two identical withdrawals. One of which would be “official” while the other launched without being accounted for in the exchange.

Allegedly, the exchange had stored all of the Nano holdings in a hot wallet, which compromised its security.

On January 21st 2019, the Italian Bankruptcy Court ruled that Mr Firano was at fault for the loss. It also ordered the seizure of Mr Firano’s personal assets to recoup as much of the lost money as possible.

A separate update from the BitGrailVictimsGroup on Medium revealed that authorities have currently seized $1 million in personal assets, including Mr Firano’s car.

The update details how the Court criticised Mr Firano for not immediately taking responsibility for the losses, stating: “By waiting to make the shortfall public, Mr Firano caused the public to suffer substantially larger losses.”

The Court ruling concludes: “The Company is clearly insolvent, since it is unable to return an equal number of cryptocurrencies of the same kind to its users, following the hack of Nano on the platform. The bankruptcy petition is therefore granted.”

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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.

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