Bitgrail vs Nano: the plot thickens

An Italian cryptocurrency exchange has announced insolvency after $170 million worth of nano tokens were lost from the exchange. The owner of exchange, tweeted that the exchange cannot repay the investors as it only holds $40 million of nano.

Bitgrail, an Italian cryptocurrency exchange, has revealed that it lost 17 million nano tokens (XRB). The news was released in the form of a post on their site and the exchange announced insolvency after the incident. The company did not use the word “hack” in their statement, rather they stated that “internal checks revealed unauthorized transactions.”

Bitgrail’s owner, Bomber Firano, posted on Twitter that the company cannot refund all of the customers as it only has $40 million nano in its possession. Nano was the only cryptocurrency affected by the problem and the rest of the altcoins are safe.

The price of Nano tumbled after the news as hundreds of users reported on their losses. The news is surrounded by controversy with Nano’s team blaming Bitgrail and its owner for covering up the disappearance of funds for a significant amount of time. Nano’s team has contacted the appropriate law enforcement agencies and will provide all the relevant information regarding the incident. Nano’s team stated that Firano suggested that amendments be made in the Nano blockchain to cover up the losses, however, that is impossible.

On a Reddit post discussing the incident, a user by the name of CaffeinIsMyHeroin points out that there was a known glitch in the system. The glitch caused people to withdraw more tokens than they had originally deposited. The user points out that this may have caused an imbalance in the token that led to the insolvency of the exchange.

However, the veracity of the Reddit user’s claims cannot be authenticated and the real reason behind the imbalance of the tokens will be released in the coming months. It seems that Bomber Firano has made a terrible mistake and may face criminal charges.

This event is just example of how unregulated and unsafe the crypto industry is. Although there has been no confirmed information regarding the developers behind Bitgrail, they must have been inexperienced to have made a mistake such as was pointed out by the Reddit user.

The industry needs to set up standards and protocols to ensure that the team behind the exchanges can run the exchange. This is not the first time crypto tokens have been lost, as a  number of other exchanges lost millions worth tokens in the past year.

Official Statement of Nano:

On February 8th, 2018, the Nano Core team was informed by Francesco “The Bomber” Firano — owner and operator of the BitGrail exchange — of a loss from the BitGrail wallet. Our team promptly contacted law enforcement and we are fully cooperating with law enforcement on this matter.

From our own preliminary investigation, no double spending was detected on the ledger and we have no reason to believe the loss was due to an issue in the Nano protocol. The problems appear to be related to BitGrail’s software.

We had no knowledge of BitGrail’s insolvency prior to February 8th.

In our conversation yesterday (which you can find attached.. adding back shortly), Firano informed us of missing funds from BitGrail’s wallet. An option suggested by Firano was to modify the ledger in order to cover his losses — which is not possible, nor is it a direction we would ever pursue.

BitGrail is an independent business and Nano is not responsible for the way Firano or BitGrail conduct their business. We have no visibility into the BitGrail organization, nor do we have control over how they operate.

We now have sufficient reason to believe that Firano has been misleading the Nano Core Team and the community regarding the solvency of the BitGrail exchange for a significant period of time.

We will not be responding to individual posts or accusations by Firano regarding this situation. We are preparing all information we have on the matter such as blockchain entries, screenshots, and chat logs and presenting them to law enforcement.

Please refer to our Twitter account @nanocurrency for future links to official statements.
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