BitGrail Liquidators Won’t Pay Victims in Cryptocurrency

The bankruptcy trustees allow users who originally filed to recover their stolen Nano coins to modify their applications.

The administrators of BitGrail cryptocurrency exchange today informed the defunct platform’s victims that they wouldn’t accept applications asking to reimburse the loss of their funds in cryptocurrencies.

The bankruptcy trustees, however, allow users who originally filed to recover their stolen Nano coins to modify their applications and request to receive restitution in euro. The former investors or creditors of the exchange will have until March 6 to modify their claims, giving them the opportunity to claw back their trapped assets.

In 2018, an Italian court seized the controversial company’s remaining assets, which are managed by a special administrator, and ruled that BitGrail must remain closed while its bankruptcy proceedings progress.

It’s not clear how much worth of cryptocurrency the exchange was holding on behalf of customers at the time of closure. But overall, the assets missing reportedly equated to 80 percent of the aggregate amount deposited on the platform.

Additionally, the Administrators in their latest update said the value of the cryptocurrency was significantly different from the amount paid by Bitgrail users at the time of purchase or when the platform ceased to operate. They added that they jointly decided with BitGrail parent to propose a different evaluation of the users’ holdings that would be more favorable for their credit balances.

A remarkable precedent

Finally, liquidators informed that they recalculated the claim values for certain applicants depending on the original records of the exchange on the date the bankruptcy was declared. Other applications were rejected either for not carrying out the required identification procedure or due to a lack of proof backing up their claims for refunds of crypto assets held by Bitgrail.

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Approved and denied creditors will have a right to dispute the claims of other creditors as well, and these claimants can appeal the process. There could be a few reasons for claims to be rejected, including the balance was zero or less than the claim, and certain claims tied to accounts are missing.

BitGrail is an Italian cryptocurrency exchange which is best known for being hacked of $170 million in Nano (formerly Raiblocks). While there were red flags for weeks leading up to the hack, Nano and Firano blamed each other for the theft and disagreed about how to deal with the aftermath.

The Nano development team strongly denied that their software is affected by any vulnerabilities to which Firano referred. Moreover, they claimed that BitGrail was holding XRB in a different kind of wallet to other coins, which left it vulnerable. In turn, Firano claimed that the Nano network itself was flawed, and if their team was to undergo a hard fork, the money could be recovered. Nano disagreed and said that it would finance the legal expenses of the victims.

The story developed when Nano became the first crypto firm to face legal action by investors seeking to force a hard fork to recover their money.

Making matters worse, Firano suggested a repayment scheme to be funded by a re-opened BitGrail. He did not admit that his exchange was at fault despite evidence surfacing that it was his mismanagement that caused and exacerbated the security vulnerabilities of the site.

 

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