BitGrail Cryptocurrency Exchange Becomes Insolvent After Losing $170 Million

Italian cryptocurrency exchange BitGrail announced it lost 17 million Nano cryptocurrency (XRB, formerly known as RaiBlocks), currently worth over $170 million.

The company did not use the word "hack" to describe the incident, but in a statement on its website, it said "that internal checks revealed unauthorized transactions."

BitGrail owner Francesco "The Bomber" Firano said on Twitter that the company cannot refund all customers, as it's currently in possession of only 4 million Nano, valued at around $40 million.

Only Nano cryptocurrency was lost in the incident, and no other cryptocurrency was stolen. The money disappeared from BitGrail' own wallets, where it is normally stored after users deposit Nano in their BitGrail accounts.

Controversy brewing between the two sides

The event will not get resolved anytime soon, as there's a controversy brewing between the BitGlass and Nano teams that might hinder efforts in finding a solution to reimburse users.

Firano accused the Nano team on Twitter of not wanting to collaborate to get to the bottom of things.

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

The Nano team answered in a scathing blog post on Medium.

"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," Nano devs said.

The Nano team also published transcripts of their recent conversations with Firano and said they notified law enforcement authorities. BitGrail also contacted authorities shortly after.

Two parties used to have a close relationship

A fallout occurred between the BitGrail and Nano teams, as the two teams were known to have had a close relationship, mainly because BitGrail was one of a handful of exchanging that supported Nano transactions.

The Nano team had a very close relationship with Bitgrail. Looks like they recommended it on twitter and on the official website multiple times. Messy situation.

— Nic Carter (@nic__carter) February 10, 2018

BitGrail has currently suspended all activity, pending an investigation. They also promised other announcements in the future.

Reddit community blames BitGrail

On Reddit, BitGrail users are banding together to file a class-action lawsuit. Some Reddit users also claim to have tracked the hack's author, but we'll not link to those discussions as there's no way to verify that users have identified and doxxed the right person.

Fellow cryptocurrency exchange Binance said it was working with Nano devs to freeze accounts where the stolen Nano was being deposited after the hack.

We are in contact with Nano team (re: Bitgrail) and will freeze deposits from identified addresses as we receive them. This is one reason we require coin CEO/founder to submit listing requests. Binance will assist where we can. We need to work together to protect users.

— CZ (@cz_binance) February 10, 2018

Currently, most of the Nano community seems to believe that BitGlass was to blame in the incident [1, 2, 3], and some users were urging others to withdraw funds before it was too late.

Nano is currently the 23rd most valuable cryptocurrency based on market cap and is trading at $10 per unit. Trading priced dipped with 5% following the hack's announcement.