Francesco Firano, the founder of the BitGrail crypto exchange, has been ordered by the court to reimburse users $170 million.
There are a lot of great features associated with Bitcoin and its virtual currency brethren, such as decentralization and the trustless blockchain. However, one has to place a good degree of trust if they’re storing coins on an exchange. Users trust that the administrators of the platform are honest and that suitable security measures have been taken. Sadly, such trust is often misplaced due to exchange hacks or bad actors trying to scam people. One such shady individual has been ordered by the Italian courts to reimburse his customers a staggering $170 million.
A Supposed ‘Hack’ of BitGrail
Based in Italy, BitGrail was known for being the cryptocurrency exchange that featured NANO, a crypto that had previously been known as RaiBlocks. The developers of NANO vouched for the exchange until things went south.
Early last year, the exchange announced that it had been the victim of a hack and that 17 million NANO tokens (worth $195 million) had been stolen. However, many users felt that the exchange was not being totally honest. In fact, there had been a growing suspicion that an exit scam was being planned.
Several details fueled speculation that the exchange was playing fast and loose with the truth. The NANO team reported that some of the funds supposedly stolen during the hack had actually been withdrawn late in the previous year, months before the hack was alleged to occur.
The Court Steps In
A number of facts came to light during legal proceedings that cast the supposed “hack” in a new light. First, Francesco Firano apparently messed up the security for the site on a regular basis in regards to the private keys of the platform’s users. In addition, Firano had moved funds from customer accounts into crypto wallets under the platform’s direct control.
Also causing issue was that Firano did not alert users that several suspicious withdrawals had been made. Lastly, the exchange’s founder quietly moved 230 bitcoins onto another exchange in order to convert it into fiat. This was done before he reported any loss of funds.
The consensus opinion of many users is that Firano mismanaged the exchange and blamed a “hack” to cover the losses. The Italian court appears to agree that he is responsible for the losses.
The court’s judgment is that Francesco Firano has to reimburse the users of BitGrail a whopping $170 million for their losses. He must also forfeit personal assets and declare bankruptcy. The court has already confiscated several million dollars in cryptocurrencies as well as over $1 million in personal assets.
The victims of BitGrail are seeing some justice, but it remains to be seen how much justice they will eventually get. It’s nice that the court has ordered Firano to repay $170 million, but this does mean that he actually has $170 million in crypto lying around. In the end, the users may have to settle for mere pennies on the dollar.
NANO is currently the 40th ranked cryptocurrency and has a market cap of $117,809,765. It is now trading at $0.884 per coin.
Do you think the founder of BitGrail will be able to fully pay the $170 million ordered by the court? Let us know in the comments below.
Images courtesy of Pixabay and Vimeo/@nanocurrency.