Victims of the $200 million BitMart hack say the crypto exchange still hasn’t paid them back

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  • Five weeks have passed since the crypto exchange vowed to return their money, say victims of the $200 million Bitmart hack.
  • In early December, Bitmart wrote in an official statement that it would use its own money to reimburse victims of the massive security breach, which the exchange blamed on stolen private keys.
  • Several Bitmart customers say they have not received any reimbursement.

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Victims of the $200 million Bitmart hack say the crypto exchange has vowed to return their money, but many still haven’t seen a single penny.

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“I’m not one to bitch and moan a lot,” said Paul DeLong, a business owner in Austin. “Bitmart, from a communication point of view, they said they are going to give us more updates. We haven’t received any updates at all.”

DeLong says he has reached out to the exchange several times, and each time, he has received a canned response from a bot informing him that Bitmart and their lawyers are “working on this.”

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In early December, Bitmart wrote in an official statement That it would use its own money to reimburse victims of the massive security breach, which the exchange blamed on stolen private keys.

But users are getting restless waiting for Bitmart to deliver on its promise.

Businesshala spoke to several Bitmart users who were targets of the attack, some of whom face total financial ruin if their funds are not recovered.

“Whether it’s $20, $500, $10,000, doesn’t matter, just communicate back to us, and let us know,” DeLong said.

Several victims lost a special token known as Safemoon, a cryptocurrency token built on the Binance Smart Chain blockchain. The second quarter of 2021 saw a massive run-up to Sikka following celebrity endorsements such as rapper Lil Yachty and YouTuber Jake Paul.

Businesshala reached out to ask whether Bitmart still plans to fulfill its promise to reimburse victims. The email address of Bitmart CEO Sheldon Xia, whom he listed His unverified Twitter profile, back, just as Businesshala first approached Zia in early December.

A spokesperson responded, “We will support all user withdrawals. We are also in talks with multiple project teams to confirm the most appropriate solutions such as token swaps. Any further updates will be announced on our official website.” ” The company did not respond to more detailed questions.

Victims plead for transparency

Businesshala personally spoke to more than a dozen Bitmart users affected by the breach. A common theme in many of these conversations was the desire for transparency. The shared sentiment was that bad news was better than no news.

A Bitmart user, who said he thought his tokens were “being held hostage,” sent Businesshala a screenshot of his exchange with the administrator running Bitmart’s Telegram account. When asked on Thursday evening if there was any further guidance on when they would get their Safemoon tokens back, the reply read, “We will announce when there is an update.”

Toronto-based Mohamed, who asked Businesshala to refer to him by just his first name, said he felt close to committing suicide because of his experience with Bitmart.

The Iranian refugee has $53,000 worth of Safemoon tokens stored in his Bitmart wallet, of which $40,000 comes from a loan that he must repay with 4% interest.

The 38-year-old tells Businesshala that from 7 a.m. to 10 p.m., seven days a week, he works as a tow truck driver for a roadside assistance company. He says he has to work long hours because his employer gives him a per-job commission instead of an hourly wage. He gets $20 per job, but has to pay for his diesel fuel.

He began investing in cryptocurrencies to try to build a future for himself in Canada.

“I was just thinking I could raise my money, then I could go to school to learn English and go to college,” Mohamed shared with Businesshala. “I don’t have any savings.”

Another Bitmart user tells Businesshala that it’s not just his money at stake. His mother and mother-in-law deposited $30,000 together and asked to invest the cash in Bitmart on their behalf.

“After I put it on, the terrible hack happened, so I was going crazy, because I had nothing to offer them,” he said.

The New York-based “Mr. Blick”, who also asked not to use his real name, tells Businesshala that the timing could not have been worse.

“It happened closer to the holidays… People sometimes have to liquidate some of their positions to buy things for the kids for Christmas, to cover expenses. Their inability to make people whole has really created an environment where that freedom we all strived for was taken away from us,” Mr. Blick said.

One Kansas-based crypto investor who has about $35,000 stuck in BitMart told Businesshala he wasn’t too concerned until recently.

“There was some common sense, even patience, on the part of holders that Bitmart was only waiting until earlier in the year to repurchase the stolen Hot Wallet tokens for tax reasons,” he said.

The same Bitmart customer now says that it is in contact with approximately 6,800 holders who are considering filing a class-action lawsuit against the exchange. They are giving it about a week till they take action.

Beware of Safmoon Army

The company’s obscurity has helped fire the so-called “Safemoon Army” – a term given to the community of Safemoon token holders, who have historically proven to be a formidable force when gathered around a cause.

The Bitmart hackers worked with a mix of over 45 coins, but the Safemoon tokens contained a substantial portion of the loot. While some Bitmart users have reported reimbursement for tokens like Saitama, Safemoon holders are in limbo.

Safemoon investors using Bitmart also say they haven’t received their “reflection” payout since November – dividend-like benefits distributed to existing holders of the token. That’s why Bitmart’s Safemoon investors are feeling doubly burned.

Even Safemoon holders who have never used Bitmart feel that they are indirectly burned by the breach.

A United States Air Force veteran said that when hackers stole Safemoon coins and sold them all on the open market, it dropped the value of the entire project. “We are all affected by it,” he said.

The Safemoon Army is pressuring Bitmart through a Twitter campaign designed to shame the exchange into paying back victims of the hack. The Safemoon team is pushing the Twitter hashtag #WenBitMart, which started trending on Monday night.

Although Bitmart told Businesshala that it would support token exchanges, victims say it could cost them money.

One person stated that if he liquidates his tokens in USDT (a popular stablecoin pegged to the value of the US dollar) on Bitmart, he will do so in a market situation that is a part of his Safemoon token trading today. is third. He will also face a 10% fee for trading due to Safemoon’s trading requirements. (This 10% transaction tax serves as an incentive for users to hold the token, which helps keep a floor under its price. They also fund dividends that token makers provide as an additional incentive. As pay holders.)

Even if Bitmart does well and pays everyone back, it remains to be seen whether the exchange will repurchase the lost similar asset at its current prices, which could be significantly higher in some cases. .,

The global leader of Safemoon’s products is the Bitmart customer itself. Ryan Arriaga says 15% of his Safemoon is on Bitmart. But he believes the exchange will do the right thing.

“It’s not like it was four or five years ago, where a lot of these people were involved, they’re anonymous … people are understanding space, they understand it more, they can read contracts better are,” Arriaga said.

“We have come such a long way now that I believe Bitmart will keep its promise and do the right thing… Especially with Safemoon Army, we have such great support for what we are trying to achieve. that it will not die. It will not only add more fuel to the fire.”

Users dig deep

As Bitmart customers wait for answers, some are spending time delving deeper into the crypto exchange itself. Businesshala participated in a Twitter Spaces chat Wednesday night in which nearly 700 people discussed the situation.

bitmart Closes $13.7 million Series B funding round at the end of 2021 at a valuation of $300 million, pausing some who wonder how the exchange is equipped to self-fund reimbursement of $200 million to customers.

Others have asked why Bitmart is not going through insurance to reimburse the stolen funds. Businesshala put that question to BitMart, and the exchange declined to respond.

Businesshala also asked whether the exchange was running an internal audit to find out if anything moved within its ranks, and again, Bitmart opted not to answer that question.

The December hack affected two of Bitmart’s “hot wallets”, but other assets were apparently “secure and unaffected”.

Cryptocurrency can be stored “hot,” “cold,” or some combination of the two. A hot wallet is connected to the Internet and allows owners relatively easy access to their coins to access and spend their crypto. The trade-off for convenience is potential exposure to bad actors.

The last and loudest concern among many Bitmart users is that instead of stopping trading of affected and non-collateralized tokens, Bitmart simply withheld withdrawals. Businesshala has seen a video in which a man bought Safemoon tokens on the exchange on January 5th, following the hack.

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