BitGrail Owner sentenced to return funds to investors
Francesco Firano, founder and owner of cryptocurrency exchange BitGrail, has been ordered to repay the $170 million worth of cryptocurrency that allegedly went missing last year.
Documents shared by a BitGrail Victims Group show Firano, known as “Francesco The Bomber”, must declare bankruptcy, forfeit personal assets, and return as much of the stolen digital assets as possible.
In making its conclusion, the court stated:
“It was the BitGrail exchange that [because of a software flaw] requested to the node multiple times to allow the funds to leave the wallet and not the Nano-network that allowed the multiple withdrawals.
Furthermore, the exchange also reportedly stored all of its Nano cryptocurrency holdings in a “hot wallet,” which compromised its security.”
The docs suggest Firano continuously bungled security matters related to the private keys (cryptocurrency) of BitGrail users, and at one point, had transferred customer funds into wallets under direct BitGrail control.
In particular, they noted he had failed to install any suitable safeguards to ensure the NANO cryptocurrency could not be repeatedly withdrawn without authorization.
This was despite millions of dollars worth of NANO being lost on multiple occasions as a result of repetitive withdrawals, with court docs stating Firano had not appropriately disclosed the suspicious transactions to his users. It took until December 2017 for Firano to respond to the situation by converting the exchange’s central wallet to a cold wallet.
Prosecutors also revealed to the court that just days before publicly announcing the BitGrail hack Firano had deposited 230 BTC into a personal account on a separate cryptocurrency exchange. Those Bitcoin would have been worth over $2 million at the time.
Investigators found Firano had also attempted to withdraw money through a Bitcoin ATM linked to that exchange.
While it’s exceedingly unlikely that Firano will be able to produce the full amount to cover lost funds, which was valued at
$170 million worth of investor NANO during the breach in February 2018, the Italian Bankruptcy Court and authorities have already seized over $1 million in Firano’s assets.
While Firano has been in a back and forth dispute with the NANO development team over who should ultimately be responsible for the hack, the court documents provided a modicum of closure. Firano, who alleges that the NANO development team was at fault due to a security flaw in their currency, was ultimately pinned with responsibility for the hack.