‘Italian FTX’ Leaves Users in Limbo, Citing ‘Difficulties in Liquidity Management’

On Feb. 17, users of a small but well-known Italian crypto exchange received emails saying The Rock Trading (TRT) was having liquidity issues and is "interrupting" its work.

“The company is conducting internal audits to identify the causes of the problem and evaluating the adoption of all appropriate or necessary initiatives to protect customers and other stakeholders,” said the email, reviewed by CoinDesk. The website became a single page showing the same message.

By Tuesday, Feb. 21, the exchange said it was pausing its operations.

TRT's problems are yet another chapter in the history of the past year's crashes, shutdowns and bankruptcies in crypto. The list includes the collapse of Terraform Labs, the bankruptcy of the Three Arrows Capital hedge fund, crypto lenders Celsius Network, BlockFi and Voyager Digital, miners Core Scientific and Compute North and the spectacular downfall of U.S. crypto exchange FTX.

Read also: CoinDesk Wins a Polk Award, One of Journalism's Top Prizes, for Explosive FTX Coverage

'I owe you an apology'

On Tuesday, TRT had a new announcement: Users could access their accounts but in read-only mode, meaning they could view their balances and trending history and generate reports, but could not trade or withdraw money from the exchange.

The same day, TRT Chief Financial Officer Andrea Medri told about 2,370 people in the TRT Telegram group that “the TRT team has been working cohesively and non-stop since last Friday to manage the crisis,” and promised more information.

“Do I owe you an apology? Yes, of course. I understand the fears and discomforts many of you have and all of my work is to find solutions that 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 in progress,” Medri said.

On Thursday, journalists at RAI, the national public broadcasting company of Italy, reported they could not find the exchange team at the official company address.

Some users called for joint legal action against TRT, but so far there is hope 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 trustworthy,” a user named Carlo told CoinDesk.

“I have been very happy with TRT for over 6 years, and I am sure and hope that they will resolve this situation to restart even stronger and with a storm overcome as in the times of the 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 transacting 70% of all bitcoin, collapsed spectacularly, leading to years of user lawsuits to retrieve funds held by the exchange.

Read also: Mt. Gox’s 2 Largest Creditors Pick Payout Option That Won’t Force Bitcoin Sell-Off: Sources

Old as Mt. Gox

TRT was founded in 2011, proudly calling itself “The First European Exchange” – TRT was indeed 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 enterprise, an insurance company in the virtual reality space called “Second Life,” in 2007.

In 2010, the two repurposed the company for trading currencies and stocks; 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 calls TRT the "Italian FTX," the platform had about 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 pretty modest through 2022, barely reaching even $1 million daily. However, in March there was a sudden surge in activity when the daily volume exceeded $72 million for just one day. According to one of the users, back then founder Andrea Medri told a closed group of investors that the abnormality was created by a single trading bot that ran berserk.

According to Il Fatto Quotidiano, TRT has had financial difficulties since 2021, when its IT provider was compromised and 311 ether (ETH), worth about 900,000 euros, was stolen from the exchange. The company filled the hole in its coffers with its own reserves, the publication wrote. In January 2023, the Italian bank Banca Sella closed TRT’s account; on Feb. 8, TRT announced the company had switched to the Irish bank Modulr, Corriere della Sera wrote.

It’s hard to tell how much customer money was stuck in TRT’s crypto wallets on Feb. 17 when the company revealed its liquidity issues.

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, and some said they have already complained to Italy’s register of financial agents, the OAM.

Andrea Medri and Davide Barbieri (who is the chief tech officer of TRT) did not respond to CoinDesk’s request for comment in Telegram and LinkedIn by press time.

Additional reporting by Elizabeth Napolitano.