BitMart exchange loses $200M worth of tokens in ‘large scale security breach’

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Popular digital currency exchange BitMart confirmed that it was hacked over the weekend, and approximately $200 million of tokens were stolen. This makes this hack one of the largest in the history of the digital currency industry.

BitMart said the attack, which it described as a “large scale security breach,” took place on December 4. While BitMart claimed the attackers withdrew $150 million in various tokens, the independent blockchain security and analytics firm PeckShield said the losses are actually closer to $200 million. BitMart has promised to compensate the victims of the hack, as well as restore trading as soon as Tuesday.

Total estimated loss: ~200M (~100M on @ethereum and ~96M on @BinanceChain ). (Previously we only counted the loss on @ethereum). And here is the list of affected assets/amounts on @BinanceChain pic.twitter.com/cXXApDFtd7

— PeckShield Inc. (@peckshield) December 5, 2021

What happened? What was stolen?

• Peckshield noticed the breach on Saturday, noticing outflows of tens of millions to an address on the Ethereum blockchain.
• Subsequent analysis showed that around $100 million was stolen on the Ethereum blockchain, and a further $96 million was taken on the Binance Smart Chain.
• Coins stolen included meme coins like Shiba Inu, Binance Coin, Cum Rocket, and Safemoon.
• BitMart claimed in a statement that these hot wallets contained only a small portion of its overall assets and that its other wallets were secure.
• According to its last statement, BitMart was still unsure what methods the attackers used.
• According to PeckShield, the stolen coins were swapped for Etheruem on the decentralized exchange 1inch and were subsequently mixed and washed through Tornado Cash.

BitMart’s links to the BSV double-spend attack

According to data on CoinGecko, BitMart is one of the most used digital currency exchanges by volume. While this means little in an industry rife with wash trading and fake stats, it is what the data says right now.

Despite its popularity, this weekends’ hack isn’t the only underhanded activity BitMart has been linked to in the recent past. This July, just as BSV was doing more transactions than most other blockchains combined, an attempted block reorg attack occurred, leading to fake BSV tokens being swapped on BitMart for other coins.

What happened: In July, malicious actors attempted to perform a block reorg attack. Honest nodes successfully defended the BSV blockchain as per the Bitcoin white paper instructions. However, the rogue actors moved various fake BSV tokens from the rogue chain to the BitMart exchange. They subsequently swapped them via non-KYC user accounts for other digital currencies, defrauding the BitMart users who bought them.

After discovering that 43 BitMart customers had been allegedly defrauded by accepting the fake BSV tokens in exchange for other assets, the exchange’s parent company, GBM Holdings, petitioned a New York court to prevent those responsible for the attack from moving their assets. BitMart also rapidly froze over 90 customer wallets linked to the fraudulent activity. In the filing, GBM asked the courts to enforce an injunction against both the hackers’ wallets and the exchanges, such as Binance and Huobi, which the fraudulently obtained assets had been transferred to.

Once again, we see that when large amounts of money are at stake, the code is law narrative is quickly discarded in favor of using the legal system for its intended purpose. This is just what Dr. Craig Wright has attempted to promote all along, yet he is heavily criticized for it by many of the same people who are only too happy to use the courts when it suits them.

BitMart and Vitalik Buterin

BitMart is associated with Ethereum creator Vitalik Buterin, a fierce critic of BSV. Recently, on the Lex Friendman podcast, Buterin launched a verbal attack against BSV, which was replete with lies and falsehoods. He also once again accused Dr. Wright of fraudulently claiming to be Satoshi Nakamoto and insinuated that BSV was nothing more than a cash grab.

Yet, a dispassionate analysis of the facts shows that BSV fees are $0.0001 on average while Ethereum’s fluctuate between $3 and $1,500. On some days, one BSV app (Crypto Fights) does more transactions than the entire Ethereum blockchain, displaying either a lack of current knowledge or apparent dishonesty on Buterin’s part.

It doesn’t take much to figure out which it is. Buterin fears Dr. Wright and BSV because they make Ethereum obsolete. BSV proves that Buterin was never the blockchain expert he likes to portray himself as. After all, if he had understood Bitcoin in the first place, he would never have created Ethereum, and if he had understood what he was doing from the outset, he never would have made an unscalable blockchain.

Just as AOL had a dominant position in the early days of the internet and lost it to better technology, so too Ethereum will fade away as BSV, which can do everything Ethereum does and scales to global dimensions.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—a from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple, Ethereum,
FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.