FTC Investigates BitMart Over Handling of 2021 Hack

Updated by Geraint Price
In Brief
  • The FTC is investigating the operators of crypto exchange BitMart over its handling of a hack last Dec.
  • The consumer-protection agency had sent subpoenas to BitMart’s operators in May, looking for information about the companies’ customer service.
  • Last year, a pair of wallets on the crypto exchange was hacked for between $150-$200 million.
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The operators of cryptocurrency exchange BitMart are being investigated by the Federal Trade Commission (FTC) over a hack that occurred last Dec.

The investigation, the agency’s first-known probe into crypto markets, was revealed in an FTC order. BitMart’s operators, Bachi.Tech Corporation and Spread Technologies, had sought to prevent the agency from compelling them to turn over information, which the order denied.

The FTC issued civil subpoenas to the companies in May, soliciting information about how they handled customer complaints and what they had told consumers about the security of their crypto assets.

In response, BitMart’s operators argued that the FTC’s document request was overly broad, and that some information would be difficult to procure, being located overseas.

The FTC hopes that these details will help it determine whether the firms engaged in unfair or deceptive business practices.

If BitMart’s operators are found to have misled users about its cybersecurity protections or not complied with financial-services laws, the consumer-protection agency could impose fines or put the companies under a consent decree, which would compel them to reform their practices. 

The FTC added that it was investigating whether the BitMart operators have been complying with a separate federal law requiring financial institutions to safeguard sensitive customer data. 

BitMart wallet breach

Last year, BitMart confirmed a cybersecurity breach in which a pair of wallets was hacked, leading to consumer losses between $150 million and $200 million. Shortly afterward, the company’s chief executive officer pledged to compensate users that had been affected by the incursion.

However, over a month after the incident, victims were still waiting for further communication from the exchange regarding the reimbursement of lost funds.

BitMart achieved a valuation of over $300 million after a funding round last year, and has offices in New York, Hong Kong, Singapore, and Seoul.

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