Italian Cryptocurrency Exchange BitGrail Lost $170 Million Worth of Nano to Hackers

BitGrail claims it was hacked last week and lost approximately 17 million Nano tokens. But the Nano team states the loss was not due to an issue in the Nano protocol but seem to be related to BitGrail's software.

Italy-based cryptocurrency exchange BitGrail has lost $170 million worth of Nano tokens, which is a digital coin previously known as RaiBlocks.

BitGrail is the second exchange that has lost substantial amounts of money this year after Tokyo-based Coincheck. The Japanese exchange lost between $400 and $534 million worth of coins in a cyber attack in January.

At least $387 million worth of Bitcoin was reportedly stolen from Japan’s Mt.Gox exchange in 2014, and the coins could be worth billions of dollars at the current prices.

Nano tokens had been stolen by hackers

BitGrail is one of many exchanges globally, which allows the trading of Bitcoin and other cryptocurrencies. BitGrail has until recently been one of the main portals for the trading of Nano.

BitGrail founder Francesco Firano claimed last Thursday that 17 million Nano tokens had been stolen by hackers. BitGrail has announced on its website that it lost $170 million to fraudulent transactions and that it has already reported them to authorities.

The exchange has stopped all withdrawals and deposits to conduct further verifications.

BitGrail founder Francesco Firano said on Twitter that there was no possibility of refunding the entirety of what the users lost. This is unlike Coincheck, which promised to refund the users their money. BitGrail's loss is not as big as Coincheck’s but still carries a lot of controversy, according to industry experts.

The Nano team has said there is "no reason to believe the loss was due to an issue in the Nano protocol and that the problems appear to be related to BitGrail's software." 

The Nano team also said Franceso suggested they revise the record to cover his losses. BitGrail has recently required users to authenticate their accounts if they wanted to withdraw their coins beyond a certain amount, which has raised suspicions. Some users have reported that they have been waiting for verification since December.

The exchange has also said that it would no longer serve non-EU users due to “legal complications”.

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The Nano team also said that they had “sufficient reason to believe that Firano had been misleading the Nano Core Team and the community regarding the solvency of the BitGrail exchange for a significant period of time.”

Industry experts say this implies that Firano has mismanaged the assets of the customers and is claiming the hack as cover. Firano has said on Twitter that Nano's claims were nothing but "unfounded allegations."

He said he told the police the Nano team printed their private conversations, which would affect the investigation.

Many international exchanges are at the moment not regulated. Even US-based cryptocurrency exchanges are not protected by any sort of consumer insurance, similar to federal deposit insurance coverage for bank deposits. Cryptocurrency experts talk against leaving tokens in the protection of exchanges and recommend using a local wallet because of the risk environment.