BitMart to Compensate Victims of the $150 Million Hack Caused By A Stolen Private Key

BitMart to Compensate Victims of the $150 Million Hack Caused By A Stolen Private Key

Centralized cryptocurrency exchange BitMart got hacked over the weekend resulting in the loss of about $150 million.

The tokens affected were mainly meme coins like Safemoon, BabyDoge, Floki, Starship, Bpay, Moonshot, Stack, and others, as well as BNB, as per blockchain security and data analytics company PeckShield Inc.

The hacker used the decentralized exchange aggregator 1inch to swap the stolen crypto for Ethereum and then deposited the ETH into privacy mixer Tornado Cash, making it harder to track the funds.

Initially, Bitmart representatives claimed that the outflows were routing withdrawals, calling the reports of hack “fake news,” but later the company posted an official announcement acknowledging the hack, noting that they have identified a “large-scale security breach” of one of each Ethereum and Binance Smart Chain (BSC) hot wallets.

However, the affected ETH and BSC hot wallets only carried a small percentage of crypto assets, approximately $150 million, on BitMart, and all the other wallets are “secure and unharmed,” the exchange added.

Most of the exchange’s cryptocurrencies are reportedly stored securely in cold wallets.

“At this moment, we are still concluding the possible methods used,” it said. “We are now conducting a thorough security review” and also working with law enforcement to solve the issue.

For now, BitMart has temporarily suspended withdrawals until further notice. Exchange founder and CEO Sheldon Xia said deposit and withdrawal functions are expected to gradually begin on December 7, 2021.

On Monday, Xia again took to Twitter to share that the exchange had completed initial security checks and identified affected assets.

This security breach was mainly caused by a stolen private key compromising two hot wallets. He assured the victims that the exchange would compensate for all the losses.

“BitMart will use our own funding to cover the incident and compensate affected users. We are also talking to multiple project teams to confirm the most reasonable solutions, such as token swaps. No user assets will be harmed,” he added.

The company is now working on retrieving security set-ups and operations.

Last month, the crypto exchange was in talks to raise about $20 million at a pre-money valuation of $300 million. Reportedly, Alexander Capital Ventures, which is backed by Spotify and Airbnb, was engaging with BitMart to lead its Series B round. The exchange has raised about $10 million in its earlier financing rounds.

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