A class action lawsuit has been filed against Nano and key members of its core team for allegedly violating federal securities law.
In February 2018, the Italian cryptocurrency exchange BitGrail lost $170 million worth of the Nano currency “XRB” due to a “hack” which has now led to a class action lawsuit represented by the Silver Miller law firm. The firm bills itself as a cryptocurrency investor law firm and currently has actions pending against the Coinbase, Kraken, BitConnect and Cryptsy exchanges as well as lawsuits against pre-functional token ICO promoters Monkey Capital and Giga Watt. Nano was originally known as RaiBlocks and changed their name to Nano in January 2018.
The lawsuit alleges that, in their push to introduce XRB to a wide market of investors, Nano and key members of its core team recklessly directed investors to open accounts and place assets with the small and troubled BitGrail exchange, where the $170 million allegedly “disappeared” in February 2018.
In the complaint, it is alleged that the Nano team engaged in an unregistered offering and sale of securities that violated Section 5, 12(a) and 15 of the Securities Act of 1933 and wrongly directed investors to BitGrail. The lawsuits request that the court rescind the plaintiff class’ investments in XRB and require Nano to “rescue fork” the missing XRB into a new cryptocurrency to compensate the victims for their losses.
The action is being brought by Alex Brola through the law firm, the defendants named in the complaint are Nano the company as well as Colin LeMahieu, Mica Busch, Zack Shapiro and Troy Retzer. The complaint notes that, of the over 130 million XRB tokens that were generated, the defendants withheld millions, if not tens of millions for themselves, the bulk of which are owned by LeMahieu. It is asserted that the defendants promoted the use of and assisted customers in getting accounts at the BitGrail exchange, where the XRB/BTC trading pair resulted in over 80 percent of their trading volume.
The defendants promoted BitGrail as a safe and reliable exchange for XRB holders. The defendants consistently and publicly endorsed and supported BitGrail, despite many complaints. Nano attracted investors with a feature set that was described as instant transactions with no fees and virtually limitless scalability. In addition, there would be no mining as all tokens already existed and no more would ever exist. The full 26-page complaint was filed in the Eastern District of New York and can be read here.
This article originally appeared on Bitcoin Magazine.