U.S. Regulator Investigates Crypto Exchange BitMart Over $200M Hack

The United States Federal Trade Commission (FTC) has launched a probe into crypto exchange BitMart over a December $200 million hack. This will be the agency’s first major crypto-related investigation.

FTC Investigates BitMart Over December Hack

According to a Bloomberg report on Wednesday, the probe was revealed in an FTC order denying a petition by BitMart operators, Bachi.Tech Corporation and Spread Technologies LLC, to quash the agency’s attempts to compel them to provide information and documents. The operators told FTC that the documents the agency sought were located outside the U.S. and not in their custody or control.

Before denying the petition, the commission had subpoenaed BitMart operators, seeking information on whether the exchange informed customers of the security of their crypto assets and how they handled customer complaints. FTC said this information would enable them to see if the exchange engaged in deceptive and unfair business practices.

FTC also noted that it was investigating whether BitMart operators breached another federal law that requires exchanges to protect sensitive customer data. The agency has now ordered the operators to comply fully with its investigative demand by providing information and documents no later than August 19, 2022.

BitMart is likely to face financial penalties if the commission discovered that the exchange did not inform customers of the security of their crypto assets or violated financial-services laws.

Last December, BitMart suffered a major security breach with the hackers stealing over $200 million from the platform. A few hours after the hack, Bitmart CEO Sheldon Xia said that the exchange will use its own reserves to compensate victims affected by the incident.

U.S. Regulators Scrutinize Crypto Firms

Meanwhile, aside from BitMart, a long list of other crypto firms have been in the crosshairs of U.S. regulators over their operations in recent times. Last month, the California Department of Financial Protection and Innovation (DFPI) said it was actively investigating crypto-based interest account providers.

Just recently, the U.S. Securities and Exchange Commission (SEC) launched a probe into crypto exchange Coinbase over whether it offered unregistered securities to investors.

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