There aren’t a lot of bright spots in the crypto market, but a recent court decision should put the twinkle back in a few Nano hodler’s eyes. An Italian bankruptcy court has ruled Francesco Firano, owner of the Bitgrail exchange, to be fully responsible for the loss of his customer’s crypto, and ordered him to return as many of the stolen assets as possible.
Authorities have already confiscated $1 million of Firano’s assets, including his car.
The judgement brings closure to the BitGrail hack, which happened just under a year ago. On February 9th of last year, Firano – who went by the nickname “Bomber’ on social media – revealed the loss of 17 million Nano to the coin’s developers. At the time, the stolen cryptocurrency had a value of $180 million.
After the theft, Firano rushed to patch up the damage, first by blaming the loss on a Nano bug. When developers refused to fork the protocol, he offered users access to the remaining 20% of their deposits—provided they agreed not to pursue legal action. The exchange, and its assets, were eventually seized by Italian authorities in May of last year.
During bankruptcy proceedings, according to the court ruling, BitGrail argued that the exchange did not have custodial obligations, and merely provided “cryptocurrency services.” They also attributed the hack to flaws in the Nano code, pointing to the software updates that came shortly after the hack.
BitGrail’s lawyers argued that the exchange “had taken all reasonable actions, and that the developers of the Nano team ought to be held liable for the missing currency.”
However, the judges seem to have taken a dim view of BitGrail’s maneuverings. Judges found Firano personally responsible for the damages, because “the losses originated from Mr. Firano’s conduct” and as a custodian “Mr. Firano also failed to promptly report to the depositors the circumstance that he had lost some of the assets.”
Court experts determined that bugs in the exchange code allowed users to make the same withdrawal several times. “Bitgrail stored all the nano cryptocurrency in a single wallet,” the court found, with a balance large enough to satisfy multiple repeated withdrawals. Based on expert testimony:
It was the BitGrail exchange that actually requested the node multiple times to allow the funds to leave the wallet (funds that, in fact, had already left the account after the first request) and not the Nano network that allowed the multiple withdrawals.
It’s hardly a happy ending for the Nano community; NANO’s market price suffered even bigger losses than those incurred by BitGrail.
Nonetheless, victims of the hack called it “a huge win for crypto users.” The victims’ social media group described the judgement as a “cautionary tale for cryptocurrency exchange owners, who have been provided with a clear example of how not to run an exchange or handle a loss of funds.”
“Hopefully,” the post concludes, “we will see less of these thefts occurring in the years to come.”
The author has investments in Nano, which is mentioned in this article.