Court Orders Seizure of BitGrail’s Bitcoin
It is no longer business as usual for cryptocurrency exchanges. A lot of cryptocurrencies have come under the hammer of regulators in recent times, and some have even been forced to shut down. At the base of these stricter scrutiny is the need for exchanges to follow the money trail – who are their customers and what are the sources of their funds.
This time around, Italian cryptocurrency exchange, BitGrail has revealed that bitcoins which were stored in the company’s wallets have been seized by the Italian government.
In an official statement dated June 15, the exchange revealed that authorities seized the funds on the order of the Tribunal of Florence. However, the exchange did not reveal how much BTC was involved. They said:
“On June 5, 2018, pursuant to the Tribunal of Florence orders, the bitcoins contained in the company’s wallets were seized and brought under control of the judicial authorities pending further Court decisions in the pre-bankruptcy proceeding.”
In February, BitGrail was hacked and 17 million Nano (XRB – formerly Raiblocks) worth $187 million was stolen. It is interestingly or rather sad to note that CEO of the exchange Francesco Firano insisted that it was impossible to refund the stolen amount, after they halted trading. This led to a back and forth argument between BitGrail and the Nano Foundation since it was unclear the channel through which the hack was perpetrated; whether the hacker exploited the exchange’s security systems or a vulnerability on Nano’s blockchain.
The hack in February is the genesis of BitGrail’s bitcoin seizure. In April, the Nano Foundation pushed a motion that it would support a legal fund which will allow all victims of the hack equal access to representation with regards to BitGrail’s insolvency. A petition was filed against BitGrail asserting that the exchange is bankrupt following article 6 of the Italian bankruptcy law. The petition was filed on behalf of BitGrail creditor, Espen Enger.
It is important to note that on May 3, the exchange reopened but was shut down three hours later at the order of the court of Florence. Reacting to this, the exchange stated that, “Even though we don’t agree with this decision, we are obliged to respect the law and to suspend any BitGrail business immediately.”
In conclusion, this once again reveals how loosely regulated the cryptocurrency. It can never be overemphasized, for a start, only invest what you are willing to lose. And as a rule of thumb, only keep a small amount of cryptocurrency on online exchanges.