FTC Looking Into BitMart Crypto Exchange
- The United States Federal Trade Commission (FTC) has opened an investigation into a cryptocurrency exchange called BitMart over a hack that occurred in December 2021.
- FTC issued an order denying a request to halt the agency’s efforts to force BitMart operators Bachi.Tech Corporation and Spread Technologies LLC to provide information.
The United States Federal Trade Commission (FTC) – which dedicates a large portion of its consumer-protection staff to scams and identity theft – has recently entered the crypto industry to mark its first probe in space. The regulatory agency is investigating the BitMart crypto exchange platform’s breach that happened in December 2021, leaving users to lose between $150 million and $200 million.
On Wednesday, the FTC issued an order denying a request to halt the agency’s efforts to force BitMart operators Bachi.Tech Corporation and Spread Technologies LLC to provide information. The businesses had argued that the FTC’s demand for documents was overly broad and that a portion of the information was housed overseas.
“These requests seek information directly relevant to the Commission’s investigation concerning the security of customer accounts and complaints about accessing accounts and conducting transactions on BitMart,”the commission stated.
Notably, in May, the consumer protection agency filed civil subpoenas on the operators of BitMart, requesting information on how the companies had informed users about the security of their crypto assets and their process for handling user complaints. These facts are anticipated to assist the FTC in determining whether the operators engaged in unfair or misleading business practices. Moreover, the regulator was also looking into the MitMart operators’ compliance with another federal law that requires financial institutions to protect sensitive user data.
In early December 2021, the Cayman Islands-based digital asset trading platform BitMart confirmed a cybersecurity attack where it said attackers stole around $150 million worth of cryptocurrencies. On the other hand, blockchain security firm PeckShield Inc. estimated the losses at $200 million. Notably, the exchange was launched in March 2018 and has over 5.5 million users worldwide, with offices in New York, Hong Kong, Singapore, and Seoul.
The FTC may impose fines and subject BitMart operators to a consent decree requiring them to alter their processes if it finds that they misled users about their cybersecurity protections or violated financial-services regulations.
The Consumer Financial Protection Bureau and the FTC were instructed to explore methods to monitor cryptocurrency transactions for fraud and abuse by President Joe Biden’s executive order dated March 9. According to the FTC, the industry has seen crypto scams rise ten times from 2020 to 2021.