BitGrail Hack

Photo courtesy of btcmanager

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In recent news, just a week or two before the curation of this article, a significant number of $XRB were hacked from the exchange, BitGrail:

Headline from http://bitcoinist.com/bitgrail-cryptocurrency-exchange-hacked-170-million-nano-allegedly-stolen/ the day of its occurrence (February 11th, 2018).

However, this hack was mired in a bit of controversy from the start. The author was fortunate enough to see some tidbits on Twitter regarding the inner-conflict surrounding Nano/BitGrail at the time that the exchange was hacked.

The news of the hack broke from BitGrail’s official account on Twitter on February 8th, 2018:

Source: https://twitter.com/BitGrail/status/961643213936300032
Another popular cryptocurrency Twitter personality posted this the following day in the afternoon.

Source: https://twitter.com/whalepool/status/962096606916079616

The article that was posted in the tweet does lead to the actual Medium statement by the developers:

URL: https://medium.com/@nanocurrency/official-statement-regrading-bitgrail-insolvency-ed4422bf274b

This post was issued by the Nano team (confirmed) the next day and named ‘Francesco “The Bomber” Firano’ (the one whom many suspect ‘stole’ the $XRB) as the individual whom initially contacted the team.

The report by Nano also firmly, without equivocation, places the blame squarely upon BitGrail when it states, “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.” [Emphasis added]

The link to the alleged correspondence between XRB and Francisco can be accessed by clicking this link here for convenience.

Perhaps what is most disconcerting, on behalf of both parties, is the fact that they knew about this event 12 hours before releasing this information to the general public.

Source: https://wallmine.com/cryptocurrency/xrb

More links of note:

https://steemit.com/raiblocks/@cryptovestor/why-raiblocks-will-end-as-a-pump-and-dump

Source: https://www.reddit.com/r/RaiBlocks/comments/7m8sa1/who_ownscontrols_the_official_representatives/

There’s something very fishy going on with $XRB — So, we should follow the money. Below, I pasted links that show the TX from wallet to wallet on the Nano/XRB network.

Here’s the developer fund wallet: https://www.nanode.co/account/xrb_18cayfdfbbbpe7ujqpk6wnzmqk69wh8ccxbcx6bu1k9zmg7hofd13x6srqqy

When I scrolled down, I was confused as to the purpose of the developer funds (not stated) or where the money was going and why (also not stated):

So, I decided to follow that address you see squared in blue that received over $1 million dollars worth $XRB from the developer account.

Here’s the link to that account: https://www.nanode.co/account/xrb_18cayfdfbbbpe7ujqpk6wnzmqk69wh8ccxbcx6bu1k9zmg7hofd13x6srqqy

I noticed that they were also engaged in a high amount of fund transfers. Check out the picture below:

Seeing as this wallet has received money from both the developers and BitGrail well in advance of the hack and in amounts in excess of one million dollars, it begs the questions of what in the world is going on here?

I decided to click on one of the wallet addresses associated with the $870,000+ payment that was made.

Here’s the URL: https://www.nanode.co/account/xrb_333mnog7catks3u97ditxmufp48rr4yd1fu1uk45xjoh7hysix5fjq57zuf3

Source: https://www.nanode.co/account/xrb_18cayfdfbbbpe7ujqpk6wnzmqk69wh8ccxbcx6bu1k9zmg7hofd13x6srqqy

Based on what we see above, it seems pretty obvious that this address was used explicitly to sell tokens on BitGrail. Let’s see what other addresses there are like that. In order to do this, we need to go back to that wallet ID we were looking at before: xrb_18cayfdfbbbpe7ujqpk6wnzmqk69wh8ccxbcx6bu1k9zmg7hofd13x6srqqy (https://www.nanode.co/account/xrb_18cayfdfbbbpe7ujqpk6wnzmqk69wh8ccxbcx6bu1k9zmg7hofd13x6srqqy )

Another transaction that I saw in that wallet that made me curious was this one:

Who could this random wallet be receiving $890,479 from? I wasn’t sure and I had no viable guesses since it wasn’t an official BitGrail or XRB representative. So, I decided to investigate by going to the wallet address directly: xrb_1zfnd3uaibxbyb6pgp19qiiom1wja3an9htcmrmfx59bjmofd8big3ucmpjk ( https://www.nanode.co/account/xrb_1zfnd3uaibxbyb6pgp19qiiom1wja3an9htcmrmfx59bjmofd8big3ucmpjk )

From first look, what struck me odd was the 23 TX labeled ‘faucet’ and ‘landing’. That seems like a lot (wasn’t the faucet supposed to only be for other prospective XRB holders?)

One thing that I really stood out to me was the $400k+ from someone an account titled, ‘developer donations’ too.

So, this account is undoubtedly tied to the developers in some way. The money received from ‘Bitgrail 1’ corroborates this as well.

It also looks like the vast majority of the money came from those sources and was accumulated in this wallet before being sent over to the wallet: xrb_18cayfdfbbbpe7ujqpk6wnzmqk69wh8ccxbcx6bu1k9zmg7hofd13x6srqqy

Another wallet that really caught my eye on the block explorer was this one: https://www.nanode.co/account/xrb_11iaqa1oppdxzawrbuzh4m5y78i9zngnhwp8urpup97fsf7k8e84gf61ei75

I noticed that this wallet sent over $11 million to a specific address before receiving another $11 million that it now currently holds.

Before investigating the wallet where it received $11 million, I wanted to get a better idea of what happened to the $11 million-worth of XRB that was sent to a ‘random’ wallet.

Here’s a picture below to illustrate:

Another thing that I found weird was that there were only 7 transactions completed on a wallet that’s had north of $22 million flowing through it. What was the purpose of this wallet?

In addition, the representative for this wallet was “Official Rep 5” — which is one of XRB’s accounts.

What Happened With the $11 Million That Was Sent?

So, I went to the account that received $11 million: xrb_3pg6xswkroybxydyzaxybb1h531sx34omiu7an9t9jy19f9mca7a36s7by5e ( https://www.nanode.co/account/xrb_3pg6xswkroybxydyzaxybb1h531sx34omiu7an9t9jy19f9mca7a36s7by5e )

The wallet that was sent $11 million was also sent about $8m+ (just ballparking — it was several deposits of over a million). Here’s the screenshot below, feel free to do exact calculations. I’m more than likely low balling it.

However, the wallet balance, at the time of my visit, was sitting at a meager $200k (which is meager when you compare it to having tens of millions flow through your account).

Using simple deductive logic, I knew that if $20M+ overall was sent to the wallet and the wallet only had $200k-ish left, then most of that money was sent out to many other places.

So, I dug through all of the important/high-value sends in order to gain a better idea of where this money was going and why.

In every single case, the flow of money could be tracked directly to BitGrail once you got to the end of the chain.

For example:

Money was sent from this wallet (original wallet that received $11 million) : xrb_3pg6xswkroybxydyzaxybb1h531sx34omiu7an9t9jy19f9mca7a36s7by5e

2.) To this wallet: xrb_38bdzqk3h7x5ymdwrar11cai1nqh1tsks4upej1ez9xmr1pkber66ga11cf1

3.) Then to this wallet xrb_1smqgc1a88kbne9yrwuipz657pnipcapwotnk5r3gzm5gh6dbrtn3q4nm3tg

And as you can see ^ BitGrail received the money.

It looks like this process happened with the entire $11M that was deposited into the original account that I discussed as well as the other $10M+ that came from the developer fund and other places.

In fact, if you track the most expensive addresses on the $XRB block explorer, you’ll notice the same result:

1.) Developers own a hoarde of tokens themselves. They’ve also bullshitted people by making them think that the faucet tokens were evenly distributed (looks like the developers owned many of the accounts that received super high faucet payouts — another way of pumping money into diff wallets).

2.) Then the wallets sent a hoarde of money to one location.

3.) Money from that location was then split up into separate payments and sent to other locations.

4.) Money from those locations were either combined, shrunken or left the same before being sent to its final location.

5.) After being in the final location, the wallet would push everything straight to the exchanage, BitGrail.

I know that this all sounds confusing and, in my opinion, I think that it was designed to be confusing. I also believe that the lead developers in charge of RaiBlocks have probably liquidated well in excess of $80+ million leading up to February 1st (the Nano rebrand).

I believe that the developers anticipated the rebrand and they simply wished to get ‘ahead of the curb’ by dumping before the event took place. This is evident by the information that’s at the top of every wallet page that gives information about the last time that activity took place in the wallet. In all cases, its within the last few months, but none of them are active currently.

Check out the price chart for $XRB leading up to its rebrand to Nano:

What Does This All Mean?

It means that calling the $XRB coin untrustworthy would be an understatement. It remains to be seen whether BitGrail was truly guilty of negligence or misconduct on its behalf when it’s blatantly obvious from the evidence posted above that they have done their absolute best to ‘wash’ millions of dollars through the BitGrail exchange over the last few months.

Therefore, I can’t rule out the idea that the exchange and the dev team collaborated, the dev team swindled BitGrail, BitGrail really did steal it or a hacker did legitimately steal the funds and now there is conflict between the two parties.

One thing I can confirm, however, is that neither party should be trusted in light of the evidence that has been presented here.

It appears that the coin team is devoid of transparency and lacking in many respects when it comes to professionalism, if we’re to be frank. These deposits/transfers to BitGrail should be thoroughly explained and the amount of coins that they own from the pre-mine should be thoroughly revealed and explained as well to the cryptocommunity as well as investors in the coin at this moment.

Sidenote: Apparently Francesco the Bomber (owner of BitGrail) agrees with the sentiments that I expressed regarding my doubts in $XRB on Twitter:

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