BitGrail Founder Under Attack, as $170 Million in Nano Still Missing

Francesco "The Bomber" Firano, the founder and CEO of the Italian cryptocurrency Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term BitGrail, has come under attack on social media during the weekend. Firano has been in the center of hundreds of tweets and Facebook posts, alongside messages on Telegram groups and sub-Reddit discussions. Some accuse him of stealing the money, others seek revenge.

BitGrail was in the news, after the exchange lost 17 million of Nano (XRB), worth some $170 million. At first, the exchange tweeted a laconic statement on Thursday morning, announcing it halted trade in XRB. In a statement issued later on its official website on Friday, BitGrail said that internal check revealed some "unauthorized transactions" that led to the disappearance of the money.

XRB Markets currently unavailable.

— BitGrail Exchange (@BitGrail) February 8, 2018

Rage, fury and death threats

In a statement published on BitGrail's official Reddit page on January 30, 2018, Firano wrote: "Being the CEO of BitGrail, whatever “hits” the site, “hits” me. This is stressful and annoying. You can certainly understand it, partially at least."

Along the lines of Firano's words, the rage of BitGrail's users was directed towards the founder and the face of the company. Most users are posting Firano's personal contacts, with his mobile, email and even home address, urging people to express their rage in "every possible way".

Some claim Firano is in fact behind the hack, and allegedly holds the missing money:

FRANCESCO FIRANO (BITGRAIL) STOLE MILLIONS. NEVER FORGET THIS FACE. from r/CryptoCurrency

Others are trying to arrange a class action suite or to initiate a criminal investigation against the exchange:

To everyone that are willing to go on with legal action please DM me. Due to the Italian law the only possible action is A Criminal report to the postal police. That will means a seizure of the website and database and hopefully the passport retirement for the people involved

— ME (@cryptodildo) February 9, 2018

In some cases, some even threatened Firano in the most evident and blunt way:

pic.twitter.com/YnWAoMrVJS

— J$AP Fur (@Furredman) February 11, 2018

pic.twitter.com/5kXPjJSqH9

— Henrique Rauen (@natrilhadopoker) February 11, 2018

Some have even threatened to take their own lives, after allegedly losing all their savings:

@bomberfrancy c’è una marea di gente che pensa al suicidio e tu te ne esci con questi tweet?

— Filippo Basso Ricci (@fbassoricci) February 11, 2018

The Bomber responded to those threats by mocking them. "Important notice to anyone who threatens me with death, could you do it under this tweet? It starts to get tiring looking at all the posts."

Avviso importante Tutti quelli che mi minacciano di morte, potrebbero farlo ordinatamente sotto a questo tweet? Inizia a diventare stancante cercare in tutti i miei post.

— Francesco The Bomber (@bomberfrancy) February 11, 2018

No reimbursement, no compensation

Most of the posts were furious over BitGrail's unwillingness to find a way to compensate the victims. In its statement, the exchange noted that they have informed the authorities, including the police. Firano offered his sympathy to his clients and apologized. However, what their announcements were lacking (and still lack at the time of writing), is a resolution on reimbursement of the missing funds to their previous owners.

Firano himself attended to the issue of reimbursement on his Twitter user and stated:

NANO on BitGrail have been stolen.

Unfortunately there is no way to give it back to you at 100% (we only got 4 MLN XRN right now). The devs, as you have guessed, dont want to collaborate — Francesco The Bomber (@bomberfrancy) February 9, 2018

Claims of insolvency

The plot thickened when Nano developer's team have officially announced on their blog that the culpability was on BitGrail's side. Furthermore, a leaked conversation between Firano and one of their developers, Zach Shapiro, allegedly proves that the missing money is a matter of insolvency (that's been going on for several months), rather than a hack.

"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."

The Bomber dismissed their claims and attacked back, by retweeting this:

The #Nano team didn't seem that interested in helping and finding a clear solution or exact answer of what has happened. Almost if their attitude was that it isn't their problem and they are washing their hands. Very poor from the #Nano team indeed. $XRB

— Observer (@elboertjie) February 10, 2018

Too little too late?

BitGrail announced last December that it's implementing a stricter KYC regulations to keep pace with the regulations. Later on, Firano stated that these restrictions have now become mandatory.

But most critics claim that this move, alongside other improvements were "too little too late", as the exchange allegedly failed to meet security requirements.

Bitgrail is implementing KYC policy. Daily limits: level 1 (unverified): 0.5 BTC level 2: 1.5 BTC The check may require up to 24 hours.

— BitGrail Exchange (@BitGrail) December 19, 2017

The broader perspective

Crypto exchanges continue to be one of the most vulnerable links in the Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term. The dangerous combination of storing enormous amounts of crypto-coins and allegedlly sub-par security meassures, makes them attractive targets for hackers, criminal organizations and even foreign governments.

Only last month, Japanese crypto exchange Coincheck was in the center of a scandal, when $723 million went missing, in what seems to be the biggest crypto theft in history. Unlike BitGrail, in Coincheck's case, the exchange promised to compensate the theft victims at 81 cents to the dollar.

It is still unclear how will this current scandal unfold, but judging from Coincheck's case, the regulator (or whether regulators) are expected to intervene, whether in a form of closer scrutiny or imposing fines on the exchange.