Nano Is Currently Being Sued Over the Bitgrail Exchange Attack

Exchanges, Law and Regulation, News

Nano (NANO/XRB) has found itself in the center of a class-action lawsuit that, if successful, could set a precedent for the way cryptocurrency developers are held accountable in the future. The lawsuit relates directly to an incident in February when the equivalent of $150 Million in the form of Nano was stolen from the Bitgrail exchange. Since the situation, the blame has been placed on the heads of several individuals, with some believing that the developers of Nano are the ones at fault.

The claimant of the lawsuit has chosen to sue Nano over the stolen funds. Among the remedies they are asking for, perhaps the most interesting and perplexing is that of a ‘rescue fork’ that could theoretically provide all the victims of the theft with a refund. If this were to be granted within a court of law, it would set a huge precedent for the world of cryptography and could cause an adverse reaction regarding Nano’s price.

What exactly is the case about?

The claimant has alleged that Nano recklessly coerced (or at least suggested) investors to place their money on the BitGrail exchange, knowing full well that the exchange was not fit to handle such an influx of users. It is further alleged that Nano violated Section 5, 12(a) and 15 of the Securities Act 1933 by offering BitGrail to investors as a viable option for trading and holding funds.

This lawsuit is being brought by Alex Brola, a US citizen, through the law firm Silver Miller. Like many others, Brola was a direct victim of the BitGrail attack in which he lost a significant amount of his wealth. He and Silver Miller have made their intentions clear, with the firm stating that there are likely ‘at least hundreds if not thousands of putative Class members’ and that they plan on reaching out to other victims soon.

On April 9, 2018, the Nano Foundation (made up of all high profile Nano developers) announced that it would be providing a legal fund for the victims of the BitGrail attack. An excerpt of their statement reads: ‘So far, the victims represented by [Espen Enger] have raised over $300,000 in multiple currencies (including over 53,000 Nano) on their own, which today will double to a value of over $600,000 with our donation. Going forward, we will match the donations received until we have met our joint goal of establishing a total legal fund worth $2 million.

Is a ‘Rescue Fork’ possible?

The most interesting request made by Alex Brola and the Silver Miller law firm is that of a rescue fork, which would supposedly refund all the victims of the BitGrail incident. But is such a fork even possible?

The act of forking a standard blockchain-based cryptocurrency such as bitcoin or ether is pretty straightforward, but one of Nano’s unique qualities is that it is not a blockchain. Nano is a ‘block lattice‘ meaning that it does not exactly have ‘chains’ which you can fork from. Arguably Banano, the fun dogecoin-style coin, is a fork of Nano’s code, but it is not a fork of the lattice itself.

Nevertheless, this places Nano and its community in a worrisome position, and it is likely that the result of this lawsuit will affect the price of the coin and subsequently people’s faith in the technology.

Kai is a cryptocurrency copywriter and professional trader. He can often be found investigating various cryptocurrencies, whitepapers, and blockchain technologies. Kai has been a professional writer for 5+ years, and has invested in 50+ different coins and tokens. He also currently studies Law and Philosophy at university.

Leave a Reply