News broke yesterday that the Italian “Guardia di Finanza” was searching the Milan offices of The Rock Trading crypto crypto exchange.
It was later reported that assets and documents were seized at the order of the prosecutor’s office.
However, it was not disclosed which assets were seized, so several people began to wonder whether Bitcoin and cryptocurrencies were also seized.
The day before yesterday it was reported that the Florence prosecutor’s office had opened a file on the closure of The Rock Trading.
In fact, a number of complaints had reached PM Sandro Cutrignelli, perhaps because he had previously investigated the failure of the Bitgrail exchange, which was based in the Tuscan capital.
It was later learned that Milan’s chief prosecutor, Marcello Viola, had also opened an investigation into the matter. Indeed, The Rock Trading is based in Milan.
It was precisely the Milan prosecutor’s office that instructed financiers from the city’s Nucleo di Polizia Economico-Finanziaria, together with the Nucleo Speciale di Polizia Valutaria, to execute its search, seizure and document acquisition order.
A note from the prosecutor’s office confirms that he received complaints from the exchange’s customers, and thus immediately activated targeted verifications that revealed, in addition to the blocking of operations, the interruption of relations with the national credit institution that had provided the platform with the account relationships through which to operate, ever since the company’s establishment (Banca Sella).
In addition, the search also found some violations pertaining to the proper preparation of financial statements.
The note adds that it is now proceeding to find the possible commission of computer crimes, and to verify the possible configuration of corporate crimes’.
It also informs that other company offices were also searched, in Genoa and Padua, as well as the homes of the two founders, Davide Barbieri and Andrea Medri.
But most interestingly, the prosecutor says that financial investigations are underway aimed at verifying the company’s management of the cash, as well as the destination of the sums collected.
Bitcoin and crypto funds from The Rock Trading, the Italian FTX
Therefore, as is obvious, the Guardia di Finanza is not only looking for evidence of possible crimes, but is also looking for the company’s funds.
It is possible to divide the company’s assets into three categories: fiat money (or traditional financial assets), cryptocurrencies, and other assets, mostly physical.
The prosecutor’s note does not reveal what assets were seized, but it is more than fair to imagine that not only physical assets were seized, but also fiat money and any other traditional financial assets owned by The Rock Trading (TRT).
A much more complex issue concerns Bitcoin and cryptocurrencies.
Seizing cryptocurrencies requires using the private key of the address on which they are stored to move them to an address controlled by the authorities.
What’s more, exchanges such as TRT typically hold cryptocurrencies in different wallets, some “hot,” meaning connected to the network because they are used daily for deposits and withdrawals, and others “cold,” meaning disconnected from the network for long-term secure storage.
In both cases, with the relevant private keys, the authorities are able to seize the tokens by sending them to their own addresses.
There are basically two ways to get hold of private keys: either they are actually found in some document or electronic device saved in plain text, or law enforcement is able to get the defendants to hand them over.
This is often the main way authorities get hold of private keys, partly because it is so difficult for a company like TRT to hide the public addresses on which their cryptocurrencies are stored.
Moreover, law enforcement can often be very persuasive in this regard.
Even though it is not known what happened, the fact that the note explicitly mentions “seizure” suggests that prosecutors may also have managed to get their hands on some of the exchange’s cryptocurrencies. However, we will have to wait for official confirmation before we can be certain.