Bad crypto news on Telegram

Following Friday’s closure, the Italian crypto exchange The Rock Trading halted releasing official news, including on its official Telegram channels.

Indeed, after posting the last message announcing the discontinuation of all activities, they did not announce anything more.

However, there are two other dedicated, unofficial channels on Telegram that have literally exploded.

Crypto news: Telegram groups about the failed exchange

Thus while the company has discontinued providing information, users have self-organized, and have started exchanging information on two Telegram channels in particular.

The first, The Rock Unofficial, was already active even before the shutdown, but since Friday it has literally exploded due to an incredible number of messages being posted every day.

It is a group with only a couple of thousand members, but it has become extremely active precisely because it is currently the main channel of communication regarding the closure of the exchange.

As the name implies it is not an official channel, and the exchange administrators are not participating in the discussions, but it is definitely the main source of information about it in these days when no news is coming from the exchange.

The second, on the other hand, is a new Telegram group set up specifically to try to connect users who fear they may have lost funds with the closure of the exchange.

It is called The Rock Trading Tutela Legale (Legal Protection), and in three days it has already surpassed 1,000 members.

This is also an unofficial group, neither of the exchange nor of the clients who are trying to recover funds, but at least it is a meeting place where information can be exchanged.

It is worth pointing out, however, that the information that is posted in these groups is by no means verified, so it should be taken with a grain of salt. Anyone can join and post, and their administrators may not necessarily be able to filter out all the possibly erroneous information that might be posted there.

The bad news

Bad news about the state of the exchange’s finances had actually also been posted previously on the official Telegram group, TheRockTrading.com – Italia, before all discussions were blocked. In this group, the exchange administrators were active until the very end, but they were unable to provide useful information to the more than 5,500 members before the shutdown.

Reading the messages posted up to Friday, it is clear that a great many users had requested withdrawals of their funds from the exchange, usually without succeeding in obtaining them. Only a few in recent days have been successful, particularly those in Litecoin (LTC).

Some of these messages were even picked up in a recent ‘Corriere della Sera’ article, which cites one in particular in which a user complains that he requested a 35,000 euro withdrawal on 3 February and has not yet received anything, besides not even receiving any answers about it from support.

But the worst thing, as the Corriere also points out, is that the administrators of The Rock Trading themselves urged users “not to generate FUD,” despite being fully aware that there were serious liquidity problems.

In fact, as admitted publicly and officially by the exchange itself, the underlying problem is the lack of sufficient liquidity to meet all withdrawal requests, and as messages posted on the official group reveal, such problems had already been there for almost three weeks.

So it was more than permissible to “generate FUD” if that meant warning that there were major problems going on that could lead to the suspension of withdrawals, or even the closure of the exchange, as then actually happened.

Moreover, not only had the administrators of the group actually urged members not to inform them of the possibility that there were serious problems, but they banned several members from the group themselves who then moved to the unofficial group.

Assumptions published on the Telegram groups

Although it is worth noting again that there is no certainty or confirmation of the veracity of what is posted on the two still-open Telegram groups, there are two main hypotheses regarding the incident.

It is worth mentioning that there is still no official rationale explaining why the exchange on Friday did not have enough cash on hand to be able to execute all the withdrawals requested by users, so as of today, unfortunately, one can only reason on hypotheses imagined by customers.

The first is that The Rock Trading’s management of funds was similar to that of FTX, i.e., that they misused funds deposited by their users to finance business expenses. Even though there is no evidence to support this hypothesis, the analogy with FTX does not seem particularly far-fetched, at least on the surface.

If so, the fate of The Rock Trading could be the same as that of FTX, namely, the declaration of insolvency and the subsequent bankruptcy of the company.

The second is that there has been a theft of funds, as indeed there was in 2021.

In that case if the funds were found and made available to the exchange, it could also avoid bankruptcy and return their funds to customers.

In either case though, the future of the exchange seems doomed, as many argue that after such vicissitudes there would be very few customers who would be able to trust using The Rock Trading again.

While waiting for more definite and concrete information on the matter, which will probably be communicated mainly via email to the exchange’s customers, one can only hope that someone will be able to give convincing explanations on the unofficial Telegram groups.