Bitgrail Hacked and Becomes Insolvent

The Nano Core team was informed by Francesco “The Bomber” Firano — owner and operator of the BitGrail exchange — of a loss from the BitGrail wallet. Our team promptly contacted law enforcement and we are fully cooperating with law enforcement on this matter.

An option suggested by Firano was to modify the ledger in order to cover his losses — which is not possible, nor is it a direction we would ever pursue.

BitGrail has suspended all activities and issued notices it has become insolvent. Many users around the globe have reported huge losses of Nano XRB.

Speculation points to Bomber knowing of the insolvency for weeks and trying to manipulate Nano devs to ransom.

First Statement Posted:

Important notice

Bitgrail Srl Informs its users that the internal checks revealed unauthorized transactions which led to a 17 million Nano shortfall, an amount forming part of the wallet managed by Bitgrail Srl

Today a charge about those fraudulent activities has been submitted to the competent authorities and now is under police investigation.

We inform you that the other currencies have not been involved.

In order to conduct further verifications, all activities will be temporarily suspended (including withdrawals and deposits). This procedure is indispensable for users security.

We offer our full and sincerest apologies to our customers.

Other announcements will be released shortly.

Thank you for your attention.

Additional statement posted:

Official Statement Regarding BitGrail Insolvency

On February 8th, 2018, the Nano Core team was informed by Francesco “The Bomber” Firano — owner and operator of the BitGrail exchange — of a loss from the BitGrail wallet. Our team promptly contacted law enforcement and we are fully cooperating with law enforcement on this matter.

From our own preliminary investigation, no double spending was detected on the ledger and we have no reason to believe the loss was due to an issue in the Nano protocol. The problems appear to be related to BitGrail’s software.

We had no knowledge of BitGrail’s insolvency prior to February 8th.

In our conversation yesterday (which you can find attached here, this link has been edited to redact a private email.), Firano informed us of missing funds from BitGrail’s wallet. An option suggested by Firano was to modify the ledger in order to cover his losses — which is not possible, nor is it a direction we would ever pursue.

BitGrail is an independent business and Nano is not responsible for the way Firano or BitGrail conduct their business. We have no visibility into the BitGrail organization, nor do we have control over how they operate.

We now have sufficient reason to believe that Firano has been misleading the Nano Core Team and the community regarding the solvency of the BitGrail exchange for a significant period of time.

We will not be responding to individual posts or accusations by Firano regarding this situation. We are preparing all information we have on the matter such as blockchain entries, screenshots, and chat logs and presenting them to law enforcement.

Please refer to our Twitter account @nanocurrency for future links to official statements.

Thank you,
The Nano Core Team

Nano Transaction Chain Leads to Additional Speculation and Questions

I don’t know. I have been looking into this and it just doesn’t add up.

the transactions should have taken place well before Jan 18 2018, due to where they are in Bitgrail 1’s wallet chain.

The last transaction on their chain that we can see is Dec112017 https://raiblocks.net/account/index.php?acc=xrb_39ymww61tksoddjh1e43mprw5r8uu1318it9z3agm7e6f96kg4ndqg9tuds4

The account in question https://raiblocks.net/account/index.php?acc=xrb_1fioob7u6ia76rfo1medtrwwdobey1ua8qe7z55qyjimir5b9d95hkdabbjn was only opened on Jan 14, 2018https://raiblocks.net/block/index.php?h=790129AAB2C823EC54BE5EB4314A9E6BB63B53AA0997483F6534642DF002DB79

How could those transactions possibly be earlier in the chain if the account chain wasn’t even started till Mid Jan. I also noticed 610 0.0 XRB transactions that were seemingly spammed to bitgrails address. Those spam transactions were sent on Wed Jan 17th. from https://raiblocks.net/account/index.php?acc=xrb_191zng5defpoof1ke9ekfei778d89igkrb3rk1f8edqukei4hhd6amc5qw4u

Reported by /u/dmanasco

Transcript Conversation between Bomber and Zack Shapiro

Transcript Zack Shapiro The Bomber Bitgrail Nano

Colin/BG chat 4 members, 1 online

Thursday, February 8, 2018

Zack Shapiro created the group «Colin/BG chat» The Bomber invited davvo

Zack Shapiro

ZS

Colin, when you have a moment, Francesco needs a statement

on what you told me last right re: time stamps on the explorer being nearly 100% accurate minus connection latency

image

The Bomber

Zack Shapiro Wed

8:09:49 AM

9:27:36 AM

ZS

Hey B, I just talked to Colin. He said that time stamps

on the explorer are accurate within a few seconds

There’s a latency due to the internet connection but those time stamps are essentially 100% accurate

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The Bomber

@Zackshapiro @clemahieu it’s urgent

Zack Shapiro

ZS

What are your questions or concerns when Colin gets on? Or do

you just need him to type it?

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The Bomber

We are investigating on a problem but we need Colin

@Zackshapiro search Colin urgently please

Zack Shapiro

ZS

I am

Can any of our other devs help?

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The Bomber

if you can fork the chain, yes zack

Colin LeMahieu

CL

HEy.

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The Bomber

Hi Colin

10:44:37 AM

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11:00:14 AM

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11:07:59 AM

11:08:07 AM

Colin LeMahieu

CL

How’s it all going?

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The Bomber

We founds a massive lost in our wallet

and we need to understand what appening

The Bomber

Hey B, I just talked to Colin. He said that time stamps on th… First, about this ^

the date is correct? are you sure? Guys we havent so many time

I need to report this lost to police asap, i need to understand some things before

Colin LeMahieu

CL

Ok, What type of info do you need from me?

image

The Bomber The Bomber

Hey B, I just talked to Colin. He said that time stamps on th…

11:08:21 AM

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^

Colin LeMahieu

CL

The time stamps on the site are when the transactios arrived to

that node so they’re within a couple seconds of when they were created.

image

The Bomber Colin LeMahieu

The time stamps on the site are when the transactios arrive… Can there be exceptions?

transactions with incorrect date of weeks/months?

Colin LeMahieu

CL

Well it’s similar to a “last accessed” timestamp. It’s just stored

in the database, it should be fairly accurate unless it was modified somehow.

image

The Bomber Colin LeMahieu

Well it’s similar to a “last accessed” timestamp. It’s just stor… check this

11:12:37 AM

11:13:08 AM

11:13:26 AM

11:15:25 AM

11:15:38 AM

acc=xrb_37qbnxbqutynm1yq6ui6bw7q738jqn6we6wikahh74g 63wwh96yjs3oun8gy (https://raiblocks.net/account/index.php? acc=xrb_37qbnxbqutynm1yq6ui6bw7q738jqn6we6wikahh74g 63wwh96yjs3oun8gy)

first block F9F8F3

Date Fri, 19 Jan 2018 18:57:00 +0000

all the next blocks are before that

someone with access to your db had modified this info? (dont change dates in any way now)

Colin LeMahieu

CL

As far as I know we’ve never changed any of it, it should be

accurate.

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The Bomber Colin LeMahieu

As far as I know we’ve never changed any of it, it should be … have you checked the txs of that address?

Colin LeMahieu

CL

Checked them for what?

image

The Bomber

the first one is the last one if you see the date

Colin LeMahieu

CL

Yea the top one is most recent.

image

The Bomber

First -> https://raiblocks.net/block/index.php? h=F9F8F3273C7D40858784B1756EFF1ADE4E26C4B28DBF038

403C2A808C5FC3531 (https://raiblocks.net/block/index.php? h=F9F8F3273C7D40858784B1756EFF1ADE4E26C4B28DBF038 403C2A808C5FC3531)

Date Fri, 19 Jan 2018 18:57:00 +0000

Colin LeMahieu

Yea the top one is most recent. see the last in the bottom

Colin LeMahieu

CL

Hmm yea that’s weird. It must not have been recorded right or

11:15:45 AM

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The Bomber

This is not a transaction authorized by bitgrail and there are so many all with the same date talking about million of xrb

millions*

see this address -> https://raiblocks.net/account/index.php? acc=xrb_1fioob7u6ia76rfo1medtrwwdobey1ua8qe7z55qyjimir 5b9d95hkdabbjn (https://raiblocks.net/account/index.php? acc=xrb_1fioob7u6ia76rfo1medtrwwdobey1ua8qe7z55qyjimir 5b9d95hkdabbjn)

almost all tx from BitGrail representative 1 got date = 19 January

https://raiblocks.net/block/index.php? h=7547EDDDB87D6D47975B6EA98A41BEB6C7DE31C952C0BF

2487F6E8E3DB8D4BE9 (https://raiblocks.net/block/index.php? h=7547EDDDB87D6D47975B6EA98A41BEB6C7DE31C952C0BF 2487F6E8E3DB8D4BE9)

https://raiblocks.net/block/index.php? h=DA8A14DA791F26AB923ED69FE7B9AF7838A3AA529C768C

ED18F8009A5F6764F9 (https://raiblocks.net/block/index.php? h=DA8A14DA791F26AB923ED69FE7B9AF7838A3AA529C768C ED18F8009A5F6764F9)

All transactions that are stolen have the wrong date.

Colin LeMahieu

CL

If the node was down and synced back at that time there could

be a lot of transactions all at once.

When your system makes trades, do you keep a date of when it operates?

image

The Bomber Colin LeMahieu

When your system makes trades, do you keep a date of whe… trades, withdraws, deposits yes

but some of txs shown are not withdraws from us we haven’t recorded in our db

we can try to calculate the date but is very difficlt if explorer is incorrect

11:20:03 AM

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11:24:30 AM

this is why I asked zack if it was accurate

edited 11:24:46 AM

Colin LeMahieu

CL

I see. Well it can’t be 100% correct because older transactions

are on the bottom and the date is later than the transactions above it.

That’s just a local date to the explorer machine though, it’s not a guaruntee.

image

The Bomber

we have suffered a stolen and did not know when this was

How do you recommend behaving as the stole only affects raiblocks?

Colin LeMahieu

CL

It seems like if you have a record of withdrawls or deposits

before/after the transactions with bad timestamps, you could figure out the date.

image

The Bomber

We certainly can not rely on the explorer as was said

Colin LeMahieu

CL

For instance if you have a record of a deposit for hash AAAA,

you see unknown transaction BBBB, and you have a record for a deposity CCCC, you can know the date of BBBB is between those two.

image

The Bomber Colin LeMahieu

For instance if you have a record of a deposit for hash AAA… if not, we havent a date

So we know that there can be no certainty of the date on raiblocks

And this is ok

Now, sure this, what can we do to solve the problem?

Zack Shapiro

ZS

how much have you allegedly lost exactly?

image

The Bomber Zack Shapiro

how much have you allegedly lost exactly?

Seems 15 MLN

11:25:32 AM

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11:30:52 AM

XRB or USD

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The Bomber

XRB

Zack Shapiro

ZS

didnt you only have 6 in your wallet?

image

The Bomber Zack Shapiro

didnt you only have 6 in your wallet? we have 4 in our wallet right now

https://raiblocks.net/account/index.php? acc=xrb_39ymww61tksoddjh1e43mprw5r8uu1318it9z3agm7e 6f96kg4ndqg9tuds4 (https://raiblocks.net/account/index.php? acc=xrb_39ymww61tksoddjh1e43mprw5r8uu1318it9z3agm7e 6f96kg4ndqg9tuds4)

https://raiblocks.net/account/index.php? acc=xrb_31a51k53fdzam7bhrgi4b67py9o7wp33rec1hi7k6z1w sgh8oagqs7bui9p1 (https://raiblocks.net/account/index.php? acc=xrb_31a51k53fdzam7bhrgi4b67py9o7wp33rec1hi7k6z1w sgh8oagqs7bui9p1)

Zack Shapiro

ZS

thx

if someone stole 15M, it would be on the chain somewhere…

image

The Bomber Zack Shapiro

if someone stole 15M, it would be on the chain somewhere… if we get all addresses you can block in some way?

Zack Shapiro

ZS

how are you determining if a transaction was “stolen”

image

The Bomber Zack Shapiro

how are you determining if a transaction was “stolen” is not in our database withdrawals list

maybe

but i cant be sure

Zack Shapiro

11:31:06 AM

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The Bomber

invalid blocks get rebrodcasted after many days

Zack Shapiro

what if it’s a bug in your code where you just didnt record it no we have the balance of all users

user with this address -> https://raiblocks.net/account/index.php? acc=xrb_1fioob7u6ia76rfo1medtrwwdobey1ua8qe7z55qyjimir 5b9d95hkdabbjn (https://raiblocks.net/account/index.php? acc=xrb_1fioob7u6ia76rfo1medtrwwdobey1ua8qe7z55qyjimir 5b9d95hkdabbjn)

have got – XX Millions XRB we got his email

we got his addresses lists

anyway i’ve closed all XRB markets and XRB deposits / withdraws right now

Zack Shapiro

ZS

do you have transactions coming from your wallet(s) to any of

his addresses

image

The Bomber Zack Shapiro

do you have transactions coming from your wallet(s) to any … yes

Zack Shapiro

ZS

ah i see them

i scrolled down

Colin LeMahieu

CL

You have email, IP?

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The Bomber The Bomber

user with this address -> https://raiblocks.net/account/in… this is one of the address who stole the xrb

Colin LeMahieu

You have email, IP?

11:33:38 AM

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email, is a @gmail

we don’t store the real IP, we have cloudflare

email is image

Colin LeMahieu

CL

Hmm, didn’t store the IP that ‘s in the proxy header?

Zack Shapiro

ZS

@TheBo mber how much do you owe people, how much do you

have

image

The Bomber Zack Shapiro

@TheBomber how much do you owe people, how much do …

Users: 19069089.34979714

The Bomber

https:/ / raiblocks.net/ account/ index.php?acc= xrb_3 9ymww… have: A

we are going to report it to police in next minutes we can’t wait ad we need to be 100% trasparent on it

Zack Shapiro

ZS

so you owe 19M and you have – 6M?

image

The Bomber

Zack Shapiro

so you owe 19M and you have – 6M? no

11 :36:50 AM

11:37:18 AM

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11:43: 34 AM

11:44:04 AM

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11:44:48 AM

11 :44 :58 AM

we got 4MLN 11:45:02 AM

not 6 11:45:04 AM

3,999,000.000000 XRB 11 :45 14 AM

https : / / raiblocks.net / account / index.php? 11 :4517 AM

acc= xrb_39ymww6l tksoddjh le43mprw5r8uu1318it9 z3agm7e 6f 96kg4ndqg9tud s4 (htt ps:/ / raiblock s.net / account/ index.php? acc= xrb_39ymww61tksoddjh l e43mprw5r8uu 1318it9z 3agm7e 6f96kg4ndqg9tuds4)

Colin LeMahieu

CL

Your other account has 2m more it seems?

The Bomber

11:45:28 AM

Your other account has 2m more it seems?

2k

not 2kk 2,008.479113 XRB

Colin LeMahieu

CL

Ahh

image

The Bomber

https://raiblocks.net/account/index.php? acc=xrb_31a51k53fdzam7bhrgi4b67py9o7wp33rec1hi7k6z1w sgh8oagqs7bui9p1 (https://raiblocks.net/account/index.php? acc=xrb_31a51k53fdzam7bhrgi4b67py9o7wp33rec1hi7k6z1w sgh8oagqs7bui9p1)

Zack Shapiro

ZS

so if someone was stealing 10K at a time from BG rep 1, were

image

you moving funds from rep 2 into it? and that’s why rep 2 is empty

The Bomber

the rep 2 is the hot address

bitgrail send from 2 and receive from 2 the 1 is our cold address

when 2 is empty we moving funds from 1 to 2

Zack Shapiro

ZS

got it

image

The Bomber

anyway

https://raiblocks.net/account/index.php? acc=xrb_1fioob7u6ia76rfo1medtrwwdobey1ua8qe7z55qyjimir 5b9d95hkdabbjn (https://raiblocks.net/account/index.php? acc=xrb_1fioob7u6ia76rfo1medtrwwdobey1ua8qe7z55qyjimir 5b9d95hkdabbjn)

^ this is one of the address who stolen

Zack Shapiro

ZS

when did you first find out about the hacker

alleged hacker

11:45:39 AM

11:45:49 AM

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11:48:20 AM

Zack Shapiro

when did you first find out about the hacker this morning

8 hours ago

Zack Shapiro

ZS

how? what triggered it

image

The Bomber

we are invetigationg on the f****g date

Zack Shapiro

how? what triggered it

i’m going to move funds from 1 to 2 and check the total users balance

The Bomber

i’m going to move funds from 1 to 2 this morning

My lawyer and I are going to the police, when we come back we will give the news of the stolen

Zack Shapiro

ZS

We increased the number of transactions on the page so you

can see further back

image

The Bomber

Thnaks

Zack Shapiro

ZS

So you have 4.2, owe 15?

image

The Bomber

4.002.000

Zack Shapiro

ZS

And how much was “hacked?”

image

The Bomber Zack Shapiro

And how much was “hacked?” 15 mln

users balances are 19069089.34979714

11:48:29 AM

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Zack Shapiro

ZS

And you only have 4,002,000 of that correct

image

The Bomber

yes zack

Zack Shapiro

ZS

Okay got it

image

The Bomber

can the fork be a solution?

Zack Shapiro

ZS

No

It looks like it’s been going on for months from the chain

image

The Bomber

i mean the burned coin

if you get bitgrail exchange you can refund with burned coin and give users their funds

without our intervention

Zack Shapiro

ZS

Why did you just close trading if you “discovered” this 8 hours

ago

image

The Bomber Zack Shapiro

Why did you just close trading if you “discovered” this 8 ho… We spent time trying to understand what happened

the date on the explorer did not help zaCK

Zack Shapiro

ZS

You didn’t notice anything at all was wrong until 8 hours ago?

image

The Bomber Zack Shapiro

You didn’t notice anything at all was wrong until 8 hours ago? no Zack, iin case i had suspended the trade before

Zack Shapiro

ZS

I don’t understand?

11:55:39 AM

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The Bomber

Zack Shapiro

I don’t understand?

we spotted the problem this morning

Zack Shapiro

ZS

If withdrawals have been closed for the last month, how did you

not notice this?

Someone with allegedly withdrawing for weeks according to you via this “hack”

image

The Bomber Zack Shapiro

If withdrawals have been closed for the last month, how did… currently no one know WHEN the hack was done

becase there is NO date in chain

Colin LeMahieu

CL

Do you have dates of wallet actions before / after?

Then you can figure out when it happened.

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The Bomber

Colin we only have these transactions with 19 Junuary as dare date*

Colin LeMahieu

CL

Did you say you internally store a date of withdrawl, trade,

deposit?

And the hash?

image

The Bomber The Bomber

Colin we only have these transactions with 19 Junuary as dare and nobody can explain why

Colin LeMahieu

And the hash? yes

Colin LeMahieu

CL

Ok, what hash/date happened before the bad transactions and

what hash/date happened after?

The Bomber

12:00:44 PM

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You probably don’t understand

the stolen wasen’t a withdraw from the site we haven’t store the HAS of the stolen txs

Zack Shapiro

ZS

https://raiblocks.net/block/index.php?

h=790129AAB2C823EC54BE5EB4314A9E6BB63B53AA0997483

F6534642DF002DB79 (https://raiblocks.net/block/index.php? h=790129AAB2C823EC54BE5EB4314A9E6BB63B53AA0997483 F6534642DF002DB79)

Colin LeMahieu

CL

Right, before those transactions, you have valid withdrawls or

deposits right?

Zack Shapiro

ZS

Here’s one from the 14th fwiw

image

The Bomber Colin LeMahieu

Right, before those transactions, you have valid withdrawls … yes

Colin LeMahieu

CL

Than you have recorded? What’s the date on those?

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The Bomber Colin LeMahieu

Right, before those transactions, you have valid withdrawls … how can i know what are the transaction before?

Colin LeMahieu

CL

Then there are transactions after the bad ones that are

recorded? Can you find the in between?

image

The Bomber

all transaction are before 19 january

Colin LeMahieu

CL

The chain is ordered, even if the dates aren’t correct.

Top is most recent and bottom in least recent in that exact order.

The Bomber

12:04:24 PM

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12:05:40 PM

yes

Colin LeMahieu

CL

So if you know the date of transactions below and above as

listed, you know about when the bad transactions happened.

So find a deposit/withdrawl before and after and then you have a range.

image

The Bomber The Bomber

https://raiblocks.net/account/index.php?acc=xrb_37qbnxb…

12:06:06 PM

12:06:24 PM

12:07:46 PM

^

the second (on the bottom) have 23 october as date so, the transaction is before that date?

Colin LeMahieu

CL

The dates you recorded, not the dates on the site.

Find a hash/date that you recorded for a withdrawl/deposit before and after.

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The Bomber

yes colin we can have the last stored info to get the renge anyway, what can we do to avoid the worst?

@clemahieu @Zackshapiro choose together how to communicate the problem

@clemahieu @Zackshapiro are you still here?

Zack Shapiro

ZS

yes

image

The Bomber

are you thinking about how we can solve this situation?

One solution can be, I give you bitgrail with all wallets and db, and you fork the burned transaction to refund users

the alternative is that this money is probably lost forever

guys, I understand it’s a shock to everyone, but we must try to solve the problem and communicate something to users

If you can take a flight to italy, it will be my pleasure to

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sure i will pay the flight

Colin LeMahieu

CL

For one of the transactions before the problem, can you tell me

a hash and date you have recorded internally for that transaction?

And then a hash/date according to withdrawal or deposit logs you keep for after also.

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The Bomber

Colin LeMahieu

CL

Let me know and we can look and maybe find a date.

Your transaction log date/hash for before and after, any transaction, doesn’t need to be the same account.

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The Bomber

().txt

21 KB

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Download ()

there is a complete list of withdraws of “xrb_1fioob7u6ia76rfo1medtrwwdobey1ua8qe7z55qyjimir5b9d9 5hkdabbjn”

with timestamp (date field)

Colin LeMahieu

CL

Your time stamps or from the explorer site?

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The Bomber

our timestamp not from explorer

However it would be important for all us to collaborate in this situation

We need to understand how to announce the problem

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The Bomber

Guys, are you going to cooperate or not?

@clemahieu @Zackshapiro

Zack Shapiro

ZS

we’re having a team conversation

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The Bomber

If I have to go on my way, tell me ok

I repeat, if we can work together, better

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The Bomber Zack Shapiro

we’re having a team conversation Guys ping me when you’re done

Zack Shapiro

ZS

let us think about it

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The Bomber Zack Shapiro

let us think about it One thing zack

We must report it to the police To avoid negligence

Jere are 9:38 p.m. So we will going to police tomorrow on 9.30a.m.

Zack Shapiro

ZS

ok

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The Bomber

If we can find a solution will be better to find it before

We need to report to the police the solution too to avoid website shutdown by police

I do not know if I have explained the thing

Zack Shapiro

ZS

explained what thing

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The Bomber Zack Shapiro

explained what thing

When i will come to police to report the stole, probably they confiscate the server to be able to investigate

I think

So, if you are able to get a solution for the stolen, better to

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If you dont understand, tell me i will try to repeat better Google translate dosent help

Zack Shapiro

ZS

ok. speak in the morning

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The Bomber Zack Shapiro

ok. speak in the morning

Is there any possibility to fork the chain and get xrb from burned address?

Seems the only solution for me right now

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The Bomber

@Zackshapiro about users, do you think we should say it now? I do not know how much else we could wait

Zack Shapiro

ZS

Can we talk about this tomorrow?

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The Bomber Zack Shapiro

Can we talk about this tomorrow?

Yes, tomorrow mean in 10 hours here

10.43 p.m. Here

Zack Shapiro

ZS

ok speak then

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The Bomber

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The Bomber

@Zackshapiro can i move funds from cold to hot? stolen address seems the cold one

Friday, February 9, 2018

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The Bomber

Hi guys

have you decided something?

Zack Shapiro

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ZS

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The Bomber

ok, we have to do it

So, no solution from your part?

@Zackshapiro @clemahieu We will say what happened.

Due to an xrb bug that caused the node to crash, the attackers forced the system to get double payments for which we have no trace of time due to another bug in xrb official explorer.

We will say that the devs refuse to cooperate despite the proposed solutions.

We are going to report the incident to the police, first and then we will explain what happened

Millions of dollars of your supporters depend on your decision.

I hope you have understood this before making the decision not to cooperate

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