‘Italian FTX’ leaves users in limbo, citing ‘Liquidity management difficulties’
On February 17th, users of a small but well-known Italian crypto exchange received emails saying that The Rock Trading (TRT) had liquidity problems and was “suspending” work.
“The company is conducting internal audits to identify the causes of the problem and evaluate the adoption of any appropriate or necessary initiatives to protect customers and other stakeholders,” said the email, reviewed by CoinDesk. The website became a single page displaying the same message.
By Tuesday, February 21, the exchange said it was suspending operations.
On Tuesday, TRT had a new announcement: Users could access their accounts, but in read-only mode, meaning they could view their balances and trend history and generate reports, but not trade or withdraw money from the exchange.
The same day, TRT CFO Andrea Medri told around 2,370 people in the TRT Telegram group that “the TRT team has been working continuously and non-stop since last Friday to deal with the crisis”, promising more information.
“Do I owe you an apology? Yes, of course. I understand the fear and discomfort many of you have, and all my work is to find solutions that will get us out of this storm. Unfortunately, I will not be able to answer the many questions that will follow , but I guarantee you that I will not spare myself in the work that is going on, said Medri.
On Thursday, journalists at RAI, Italy’s national public broadcaster, reported that they could not locate the exchange team at the official company address.
Some users called for joint legal action against TRT, but so far there is hope that the exchange will find a way out of the crisis. TRT has been trusted by Italian traders for more than a decade. “The Rock is a small exchange, but here in Italy it was considered one of the most reliable,” a user named Carlo told CoinDesk.
“I have been very satisfied with TRT for over 6 years and I am sure and hope that they will resolve this situation to start even stronger and with a storm overcome as in times of crisis [at] Mt. Gox,” one of the users posted in the group chat.
Mt. Gox, which operated out of Japan between 2010 and 2014 and once traded 70% of all bitcoin, collapsed spectacularly, prompting years of user lawsuits to extract funds held by the exchange.
Old as Mt. Gox
Founded in 2011, TRT proudly called itself “The First European Exchange” – TRT was actually among the first crypto exchanges ever. It was founded the same year as another early European exchange, Bitstamp, and one year earlier than LocalBitcoins (which recently closed). The founders, Andrea Medri and Davide Barbieri, started their first joint venture, an insurance company in the virtual reality space called “Second Life”, in 2007.
In 2010, the two repurposed the company for currency and stock trading; the following year they launched a bitcoin exchange. Since 2013, the company has been registered in Malta. In September 2020, TRT raised 1.5 million euros in funding.
According to Italian media, which often refer to TRT as “Italian FTX”, the platform had around 34,000 registered users, although members of the Telegram group chat believe that active users did not exceed 5,000.
According to CoinGecko, TRT trading volumes have been quite modest through 2022, barely reaching a million dollars daily. In March, however, there was a sudden surge in activity as daily volume exceeded $72 million for just one day. According to one user, then-founder Andrea Medri told a closed group of investors that the abnormality was created by a single trading bot gone berserk.
According to Il Fatto Quotidiano, TRT has been experiencing financial difficulties since 2021, when its IT provider was compromised and 311 ether (ETH), worth around 900,000 euros, was stolen from the exchange. The company filled the hole in the coffers with its own reserves, the publication wrote. In January 2023, the Italian bank Banca Sella closed TRT’s account; On February 8, TRT announced that the company had switched to the Irish bank Modulr, Corriere della Sera wrote.
It’s hard to say how much customer money was stuck in TRT’s crypto wallets on February 17 when the company revealed its liquidity problems.
TRT users had been complaining about long withdrawal times for months before the shutdown, according to Corriere della Sera. Now over a thousand users are discussing potential legal steps to get their money back in a separate Telegram group, with some saying they have already complained to Italy’s register of financial agents, the OAM.
Andrea Medri and Davide Barbieri (who is the chief technical officer of TRT) did not respond to CoinDesk’s request for comment on Telegram and LinkedIn by press time.
Additional reporting by Elizabeth Napolitano.
