Italian police accuse cryptocurrency exchange boss of huge fraud

ROME (Reuters) - Italian police said on Monday a man who ran a cryptocurrency exchange that was declared bankrupt last year is suspected of being responsible for a series of hacks that caused losses of 120 million euros ($146 million).

More than 230,000 people were defrauded by the cyber-theft of a cryptocurrency called Nano which was held by the company BitGrail, the postal police said in a statement.

"It is the biggest cyber-financial attack in Italy and one of the biggest in the world," the police said.

"For the first time in Italy and in Europe, we have documented fraudulent and rapacious conduct to the detriment of investors carried out entirely on IT platforms and via the use of virtual currencies."

Police said the suspect was a 34-year-old from Florence, and gave his initials as F.F. He faces charges of computer fraud, fraudulent bankruptcy and money-laundering. It was not immediately possible to contact the man or his lawyers.

F.F. himself contacted police in February 2018 to flag the hack and the loss of "a huge sum" of Nano Coin, a thinly traded currency which was launched in 2015.

Ivano Gabrielli, director of the national centre for cyber crimes (CNAIPIC), told Reuters that after it started to investigate it became clear the BitGrail chief was involved.

"It is not yet clear whether he participated actively in the theft or if he simply decided not to increase security measures after discovering it," he said.

The police said it would have been easy to prevent the theft once the first hack had been spotted, but instead, "F.F. knowingly failed to prevent them", thereby allowing the Nano currency to be drained from accounts.

($1 = 0.8223 euros)

(Reporting by Antonella Cinelli, editing by Crispian Balmer and Mark Heinrich)