Class Action Filed Against Nano, BitGrail After Investors ‘Lost’ $170 Million in Cryptocurrency

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A proposed class action has been filed against Nano (formerly known as RaiBlocks), several members of its core team, BG Services, and S.R.L. and its owner after the Italian-based cryptocurrency exchange known as BitGrail “lost” approximately 15 million XRB – a cryptocurrency developed by Nano – said to be worth about $170 million. According to the lawsuit, Nano essentially sold millions of XRB as unregistered securities and encouraged investors to place their assets at BitGrail despite knowing it lacked adequate safeguards.

The case explains that prior to February 2018, the Nano defendants, by “calculated choice,” made their cryptocurrency available only on BitGrail and assured investors that their assets would be safe on the platform. Notwithstanding their assurances, BitGrail, the suit says, announced in early-February 2018 that it had “lost” $170 million-worth of XRB – nearly 80 percent of all XRB in customers’ BitGrail accounts – from its exchange due to “unauthorized transactions.”

After the announcement, the case goes on, the Nano defendants attempted to distance themselves from both BitGrail and their liability for investors’ losses, going so far as to file suit against BG Services.

Notably, the suit points out, the defendants have refused to implement a solution to compensate investors that “resides squarely within [their] hands,” namely, a rewriting of the XRB code that would simply restore ownership to affected individuals. From the complaint:

“Without adequate protections in place, Plaintiff and the Class have suffered millions of dollars of harm; and the Nano Defendants -- without regard to the regulatory environment in which they live and operate their business -- have tried to distance themselves from that harm and have refused to institute the remedy well within their grasp, simply because it does not suit their own financial interests.”

The case argues that the defendants’ XRB were essentially securities that were never registered with governmental authorities and should be subject to protections under federal securities law.