Nano’s developers and other parties are facing a class action lawsuit for the second time. The lawsuit names Francesco Firano, Nano as an entity, BitGrail, and four others in a lawsuit projected on Friday in a California federal court. Among the accusations filed against them includes deception and violations of the Securities Act. The lawsuit alleges the defendants conned investors. Nano was once valued more than $50 but today is around $1. For Firano’s part, he last tweeted regarding the BitGrail state of affairs 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 technique of mitigating a lawsuit. Early on in the complaint, the plaintiffs, led by James Fabian, says:
“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.”
The Sequel to Nano Lawsuit
Fabian is a litigation secretary in San Francisco. He was also an investor in Nano. Fabian suffered a loss of $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 inhibited last year. In the other suit, a plaintiff named Alex Brola said he had initially invested $50,000 into Nano. His venture grew to $237,000 before he lost everything in a breach of BitGrail.
According to James Fabian’s lawyer David Silver, Nano became accountable when they violated securities law and ensured people to buy and store their Nano on BitGrail. Mr. Fabian suffered reparation, and we believe Nano, its core team, BitGrail and the owner of BitGrail are accountable.
Security Breach Critical to New Suit
A law firm called Levi & Korsinsky LLP is involved and has conducted other crypto security cases. Silver points stated that comments made in the previous suit are different from the current one.
“Primarily using the Securities Act as a foundation for the claims, a court can recognize that the investors had no safeguard. In short, if the plaintiffs can prove that Nano were acting illegally, their chances of winning the suit are improved. Being a registered or unregistered security is equivalent to 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.”
Italian Authorities continue to hold Funds
Italian authorities continue to hold the remnants of BitGrail’s funds following the hack of more than 80% of its Nano. According to David Silver, Nano told people they are trying to regain, but their efforts “have gone nowhere”.
Colin LeMahieu, a lead developer at Nano and one of the defendants, last year stated:
“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.”
Erasing evidences of BitGrail Involvements
According to the lawsuit, Nano developers have made efforts to distance themselves from BitGrail. Although, BitGrail once provided a large amount of liquidity for Nano.
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 end to “provide all victims of the hack of the cryptocurrency exchangeDistrict 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 BitGrail with equal access to representation” and enable such investors to seek recourse against the exchange.”
Fork Option: The Salvage
The lawsuit claims about a technical resolution 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.
No Representation for International Investors
The lawsuit only represents US investors. If it comes out in goodwill of the plaintiffs, international sufferers would have something to base yet another lawsuit on.Its conclusion relies heavily on how the court views Nano’s position with the SEC and its decision to certainly not become registered security. It’s anonymous what level of damages would incur in case of a favourable decision to plaintiffs.
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.”
It seems obvious that the damages caused could go much higher than the figures stated.