Nano Cryptocurrency Facing Second Class-Action Lawsuit Over BitGrail Hack

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Nano Cryptocurrency Facing Second Class-Action Lawsuit Over BitGrail Hack root 1 min ago Google+ VKontakte Telegram Viber Nano Cryptocurrency Facing Second Class Action Lawsuit Over BitGrail Hack
For the second time, Nano’s developers and other parties are facing a class action lawsuit. The lawsuit names Francesco Firano, Nano as an entity, BitGrail, and four others in a lawsuit proposed Friday in a California federal court. Among the allegations against them are fraud and violations of the Securities Act. The lawsuit alleges the defendants tricked investors. Nano was once worth more than $50 but today is around $1.
For Firano’s part, he last tweeted about the BitGrail situation back in June 2018: Se non l’aveste capito, io non ho più accesso ai fondi depositati su bitgrail.
Sono stati sequestrati a seguito delle azioni legali promosse da Espen Enger.
È inutile che continuiate a contattarmi, ormai io non posso fare più niente.
Dovrete aspettare il tribunale.
— Francesco The Bomber (@bomberfrancy) June 16, 2018
Criminal activity is a good method of justifying a lawsuit. Early on in the complaint, the plaintiffs, who are led by James Fabian, say:
Throughout the Class Period as defined below, Defendants directed the investing public to purchase XRB through BitGrail by providing specific investment instructions and assurances that the cryptocurrency exchange was secure and could be trusted to safeguard investment assets. Nano Lawsuit: The Sequel
Fabian is a litigation secretary in San Francisco. He was also an investor in Nano. Fabian lost $260,000 in the BitGrail hack.
According to Law360, the current suit draws heavily on the activities of Nano developers and on a lawsuit that was withdrawn last year. In the other suit , a plaintiff named Alex Brola said he had invested $50,000 into Nano. His investment grew to $237,000 before he lost everything in a breach of BitGrail.
According to James Fabian’s lawyer David Silver, Nano became liable when they violated securities law and encouraged people to buy and store their Nano on BitGrail. Social media posts by Nano and others plays a prominent role in the complain. You can read the whole complaint below. Silver told Law360 :
Mr. Fabian suffered damages, and we believe Nano, its core team, BitGrail and the owner of BitGrail are liable. Securities Violations Crucial to New Suit
A law firm called Levi & Korsinsky LLP are involved in this case as well. Levi & Korsinsky have conducted other crypto security cases. One such case involves Cloud With Me . Silver points out that the claims made in the previous suit are different from the current one. Primarily using the Securities Act as an underpinning for the claims, a court can understand that the investors had no protection.
In short, if the plaintiffs can prove that Nano were acting illegally, their chances of winning the suit are increased. Being a registered or unregistered security is like the difference between hitting someone with and without car insurance. In the latter case, you are 100% liable. In the former, your insurance may absorb some or all of your responsibility. Funds Seized By Italian Government Still in Limbo
Italian authorities continue to hold the remainder of BitGrail’s funds following the hack of more than 80% of its Nano. Nano have said told people they are trying to get it back, but their efforts “have gone nowhere” according to David Silver.
CCN conducted an interview with Colin LeMahieu, a lead developer at Nano and one of the defendants, last year. At the time, LeMahieu was confident that Nano development would continue:
While the BitGrail situation is extremely unfortunate, it has not impeded the project. We allocated significant resources towards both determining what exactly happened, as well as investigating legal options, but as far as protocol development and overall project milestones are concerned we have continued to move forward.
Nano developers were still posting updates as of early last month. Nano Developers Try to “Erase the Fact” Of BitGrail Involvement
According to the lawsuit, Nano developers have made efforts to distance themselves from BitGrail. BitGrail once provided a large amount of liquidity for Nano.
[T]he Nano Defendants have made every effort they could conceive of to distance themselves from BitGrail and erase the fact that each was substantially involved with BitGrail’s operations related to XRB. Indeed, the Nano Defendants have even gone so far as to fund a lawsuit against its former partner-in-crime, the BitGrail Defendants, so as to avoid unwanted attention for their actions. For example, on April 6, 2018, a putative class action (which has since been settled on an individual non-public basis) was filed in the United States District Court for the Southern District of New York. A mere three (3) days later, on April 9, 2018, the Nano Defendants announced that the Company was “sponsoring” a “legal fund” purportedly designed to “provide all victims of the hack of the cryptocurrency exchange BitGrail with equal access to representation” and enable such investors to seek recourse against the exchange.
Today, more than 70% Nano’s volume takes place on massive exchange Binance. Today, more than 70% Nano’s volume takes place on massive exchange Binance. The Rescue Fork Option
The lawsuit talks about a technical solution that Nano developers have so far not pursued:
Defendants can rewrite the XRB code and simply restore ownership to Plaintiff and the Class. In crypto terms, Defendants can create a “rescue fork” to protect Plaintiff’s and the Class’ property rights. Defendants, however, have refused to implement that strategy because it is not in their own best interests. The reason is simple: Defendants still own and control millions if not tens of millions of XRB and do not want to sacrifice any financial advantage they currently hold over the average XRB investor victimized by the XRB disappearance at BitGrail, which Defendants would do by “rescue forking” and returning the stolen digital assets.
The previous lawsuit demanded as much. A rescue fork never materialized. International Investors Not Represented
The lawsuit only represents US investors. If it comes out in favor of the plaintiffs, international victims of the same class would have something to base yet another lawsuit on.
Its outcome will depend heavily on how the courts view Nano’s standing with the SEC and its decision to never become a registered security. Its unknown what level of damages would come out of a decision favorable to plaintiffs. Losses total more than $170 million in the BitGrail hack, but that figure may only play nominally into a decision. As the suit says:
Between January 2015 and March 2018, in connection with the offer and sale of XRB, Defendants unlawfully made use of means or instruments of transportation or communication in interstate commerce or of the mails for the purposes of offering, selling, or delivering unregistered securities in direct violation of the Securities Act. Untold Damages Sought
The relief sought in the suit is multi-fold. They want their XRB back as well as they want pre-judgement and post-judgement interest and “equitable compensation” for losses incurred. Fabian and his class want the defendants declared liable under the Securities Act, which opens a new can of worms for Nano and other co-defendants. Also:
An award of any and all additional damages recoverable under law — jointly and severally entered against Defendants — including but not limited to compensatory damages, punitive damages, incidental damages, and consequential damages.
Overall, the suit appears directed more at recovering lost money for members of the class. While it mentions that a rescue fork was one solution that Nano developers never pursued, its actual “relief” demands do not include a rescue fork.
The entire market capitalization of Nano at time of writing was just under $140 million. The amount lost in the BitGrail hack was more than that. It seems evident that the damages sought could go much higher than these figures combined. Nano Cryptocurrency Facing … by on Scribd
Featured image from Shutterstock.

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