The Federal Trade Commission [FTC] is investigating the operators of crypto exchange BitMart over its December 2021 hack that led to consumer losses of around $200 million.
Per reports, this case makes it the agency’s first known investigation into crypto markets. Bloomberg revealed,
“The investigation was disclosed Wednesday in an FTC order denying a bid by BitMart operators Bachi.Tech Corporation and Spread Technologies LLC to block the agency’s efforts to compel them to turn over information.”
The companies, on their part, had argued that the FTC’s document request was “overly broad” and that some of the information was located overseas.
Notably, the regulatory body had sent civil subpoenas to BitMart operators in May. They’d sought information on how the companies have handled customer complaints and what they told consumers about the security of their crypto assets. With the help of these details, the agency will likely take a call on whether or not the firms engaged in unfair/deceptive business practices.
Alongside, the Bloomberg report also revealed,
“The FTC also said it was investigating whether the BitMart operators were complying with another federal law that requires financial institutions to safeguard sensitive customer data.”
BitMart Hack: Quick Flashback
The hack essentially materialized when perpetrators stole a private key that opened two hot wallets. They stole $100 million worth of various cryptos on the Ethereum blockchain, and $96 million on Binance Smart Chain.
The hackers had used decentralized exchange aggregator 1inch to swap stolen tokens for Ethereum. Then, they had deposited the said funds to privacy mixer Tornado Cash to veil their identities.
Per Bloomberg, if the FTC finds that the companies misled users about its cybersecurity protections or did not comply with financial-services laws,
“… it can impose fines and put them under a consent decree ordering them to change their practices.”