Italian Authorities Accuse BitGrail’s CEO of Laundering Exchange’s Funds

The case concerning BitGrail, the Italian cryptocurrency exchange that suffered a major hack in 2018, is still ongoing. With creditors still looking to get their funds out, a local judge has roped its chief executive, Francesco Firano, even deeper in the case.

Moving Funds Despite Knowing of the Hack

The Postal and Communications Police – the cybercrime division of the Italian State Police – revealed that it found substantial proof linking Firano with money laundering activities in the aftermath of the exchange’s 2018 hack.

The announcement claimed that the BitGrail CEO had taken custody of customers’ funds prior to reporting the $150 million security breach to law enforcement.

According to the announcement, Firano withdrew up to 230 BTC – worth $1.9 million at the time – just three days before he reported the theft of NANO tokens that had occurred. The supposed laundering occurred months after the exchange had suffered its security breach. The police were able to trace the Bitcoins to The Rock Trading, a Malta-based trading firm that Firano allegedly owns.

While authorities have tried to retrieve the funds, they claimed that most of it remain in the trading firm’s accounts. It remains unclear who actually stole the funds, or how much is in The Rock Trading’s accounts. Tying Firano to the case, the authorities explained:

“In keeping the platform open, despite having identified illicit withdrawals of Nano coins, and not informing the Nano team […] FF continued to attract new users, who rose from 70,000 to about 217,000 within a few months, benefiting from the notoriety of being the first and only Italian exchange to deal with [Nano].”

Altogether, Firano Was a Terrible CEO

This isn’t the first time that Firano and BitGrail’s operational issues will come to light. In January 2019, a BitGrail victim advocacy group shared that an Italian judge ordered him to repay the funds stolen from the exchange.

According to documents shared by the group, Firano was ordered to declare bankruptcy, forfeit all his assets, and reimburse victims to the best of his abilities. The ruling explained that Firano had continuously fumbled with security matters concerning the BitGrail users’ private keys. At one point, he also transferred funds into wallets that were under the company’s direct control.

The documents also revealed that Firano deliberately failed to install the right safeguards to ensure that unauthorized withdrawals of NANO weren’t possible. The refusal came after millions of dollars’ worth of the currency had been lost on multiple occasions due to repeated withdrawals. 

For his part, Firano isn’t taking any of this laying down. He went on a Twitter tirade, denying all allegations and claiming that the proof tying him to any money laundering was false. He added that the police hadn’t arrested him, and that the postal service had been in on the plot to frame him.