Nano Lawsuit Could Result in “Rescue Fork”

The developers of Nano (XRB), previously called RaiBlocks, are being sued over a BitGrail hack. Both Nano and BitGrail are working towards compensating victims of the hack. Compensation may include a “rescue fork.”

The most important thing to note is that the lawsuit seeks compensation for damages by attempting to force a Nano fork or “rescue fork” to rescue the funds stolen in the hack. If this happens, it would be the first time to my knowledge that a lawsuit resulted in a cryptocurrency fork.

This news is both exciting and important to understand, as it helps to shed light on the declining price of Nano and potential issues of cryptocurrency taxation.

It also helps to remind people of the danger of using some of the lesser known cryptocurrency exchanges. This is true for users and developers who are seeking to get their coins listed.

BitGrail wasn’t inherently good or bad, but it wasn’t in the same league of top tier exchanges as GDAX, Bittrex, Binance, Bitfinex, etc. BitGrail lost $170 million worth of Nano in February 2018. They had to shut down after the loss, and they are now working on reopening their doors.

BitGrail and Nano are currently working to correct the overall issue, but much damage has already been done.

The story could potentially have a happy ending for both entities, but this is by no means certain. Let the story serve as a cautionary tale about the importance of researching details, particularly if you invested in Nano, plan to, got your funds stolen in the hack, or had been a BitGrail user.

I’d like to remind readers that the NEM hack only affected NEM’s price temporarily; NEM ended up having a few nice upward price swings after the drama had died down. Don’t count Nano out in the long-term or even medium-term, but be aware of the current troubles.

NOTE: The law firm bringing this case is a U.S. law firm called Silver Miller. They also have 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. See SECURITIES CLASS ACTION LAWSUIT AGAINST NANO AND MEMBERS OF ITS CORE DEVELOPMENT TEAM.

OPINIONS: There is one obscure problem worth noting in this suit. The lawsuit alleges that “that Nano and key members of its core team violated federal securities laws…” No crypto investors want the words “lawsuit,” “federal securities laws,” and “cryptocurrency” to be in the same sentence. At the moment, exchanges and ICOs are likely to have to do extra work to comply with SEC rules and securities laws given recent talks in Congress. Indeed, everyone needs to follow the laws of their nation, state and nations and states they operate in. However, cryptos are considered investment property in the U.S. and not securities. Blurring the lines between securities and property isn’t good or bad per se, but it could make trading in crypto increasingly complex. For example, if crypto gets treated as a security in a court ruling, then there is a legal precedent for viewing cryptos as securities. At the same time, cryptocurrency is taxed as an investment property and not a security. I’m not a legal scholar, but I believe that this issue that could potentially lead to the re-classification of cryptos, which might expose them to new regulations. This is a matter to keep an eye on.

Please see Nano Foundation Announces Legal Fund For BitGrail Victims for updates on the current plans to rectify the problem and see Nano Team Target of Cryptocurrency Class Action Lawsuit for more on the potential “rescue fork.”

Author: Thomas DeMichele

Thomas DeMichele has been working in the cryptocurrency information space since 2015 when was created. He has contributed to MakerDAO, Alpha Bot (the number one crypto bot on Discord),...

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