The Federal Trade Commission (FTC) is looking into BitMart over a hack that occurred in December 2021 which resulted in consumers losing $150 million to $200 million. This is the agency’s first known investigation into crypto markets.
The probe came to the fore when FTC in an order rejected 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. They argued that FTC’s request was overly broad and that some of the information was located overseas.
In May, the FTC sent civil subpoenas to BitMart operators. It sought details on what the companies told consumers about the security of their crypto assets and how they have handled customer complaints. FTC expects the information to determine whether the firms are engaged in unfair or deceptive business practices. Its also looking into whether BitMart operators were complying with another federal law that requires financial institutions to safeguard sensitive customer data.
If FTC established that the companies misled users about their cybersecurity protections or didn’t comply with financial-services laws, it will impose fines. The agency will also put them under a consent decree ordering them to change their practices. The FTC works on a large portion of its consumer-protection work on scams and identity theft. It recorded a tenfold increase in crypto scams from 2020 – 2021 – including get-rich-quick schemes and fake celebrity endorsements involving lesser-known currencies.
BitMart, in December 2021, suffered a cybersecurity breach with hackers making off with $150 million of cryptocurrencies from BitMart wallets.