Sarayut Thaneerat | Moment | fake images
Victims of the $ 200 million BitMart hack say it’s been five weeks since the crypto exchange promised to return their money, but many have yet to see a penny.
“I’m not one to complain and complain a lot,” said Paul DeLong, a business owner in Austin. “BitMart, from a communication perspective, said they were going to give us more updates. We have not received any updates.”
DeLong says that he has contacted the exchange multiple times, and each time, he has received a canned response from a bot to inform him that BitMart and its lawyers are “working on it.”
In early December, BitMart wrote in an official statement that it would use its own money to reimburse victims of the large-scale security breach, which the exchange attributed to a stolen private key.
But users are restless waiting for BitMart to deliver on its promise.
CNBC spoke with several BitMart users who were targets of the attack, some of whom face total financial ruin if they don’t get their funds back.
“Whether it’s $ 20, $ 500, $ 10,000, it doesn’t matter, just contact us and let us know,” DeLong said.
Many of the victims lost a particular token known as a safe moon, which is a cryptocurrency token built on the Binance Smart Chain blockchain. The coin saw a massive spike in the second quarter of 2021 after a slew of endorsements from celebrities the likes of rapper Lil Yachty and YouTuber Jake Paul.
CNBC reached out to ask if BitMart still planned to fulfill its promise to reimburse victims. BitMart CEO Sheldon Xia’s email address listed at your unverified Twitter profile, bounced back, just as it did when CNBC first reached out to Xia in early December.
A spokesperson responded: “We will support all user withdrawals. We are also speaking with various project teams to confirm the most reasonable solutions, such as token exchanges. Any further updates will be announced on our official website.” The company did not respond to more detailed questions.
Victims ask for transparency
CNBC spoke to more than a dozen BitMart users personally 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 felt his tokens were “being held hostage,” sent CNBC a screenshot of his exchange with the manager managing BitMart’s Telegram account. When he asked Thursday night if there was any additional guidance on when he would receive his safe moon tokens, the response read, “We will announce when there is an update.”
Toronto-based Mohamad, who asked CNBC to refer to him by his first name, said he feels close to committing suicide due to his experience with BitMart.
The Iranian refugee is worth $ 53,000 in the safe moon token stored in his BitMart wallet, $ 40,000 of which comes from a loan that he has to repay with 4% interest.
The 38-year-old tells CNBC that since 7 a.m. M. Until 10 p.m. M., seven days a week, works as a tow truck driver for a roadside assistance company. You say you have to work long hours because your employer pays you a commission for work instead of an hourly wage. He receives $ 20 per job, but has to pay for his own diesel fuel.
He started investing in cryptocurrencies to try to carve out a future for himself in Canada.
“I was thinking that I can grow my money, then I can go to school to learn English and go to college,” Mohamad shared with CNBC. “I have no savings.”
Another BitMart user tells CNBC that it’s not just your money that is at stake. His mother and mother-in-law raised $ 30,000 and asked him to invest the cash in BitMart on their behalf.
“After I put it on, the damn trick happened, so I was freaking out, because I had nothing to give them,” he said.
New York-based “Mr. Blik,” who also asked not to use his real name, told CNBC the timing couldn’t have been worse.
“This happened around the holidays … People sometimes have to liquidate some of their positions to cover expenses, to buy things for the children for Christmas. Their inability to make people whole really created an environment in that freedom that we all fought for was taken from us, “said Blik.
A Kansas-based crypto investor, who has around $ 35,000 trapped in BitMart, told CNBC that he wasn’t very concerned until recently.
“There was a general understanding, even patience, from the holders that BitMart was simply waiting until after the first of the year to buy back the stolen hot wallet tokens for tax reasons,” he said.
This same BitMart customer now says they are in contact with around 6,800 holders who are considering filing a class action lawsuit against the exchange. They are giving you about a week until they take action.
The company’s vagueness has helped launch the so-called “Safe Moon Army,” a term given to the Safe Moon community of token holders, who historically have proven to be a formidable force when rallied around to a cause.
BitMart hackers took a mix of more than 45 coins, but safe moon tokens accounted for a large chunk of the loot. While some BitMart users have reported refunds for tokens like saitama, holders of the safe moon remain in limbo.
Safemoon investors using BitMart also say they have not received their “reflection” payments, a benefit similar to a dividend distributed to existing holders of the token, since November. Thus, BitMart’s safety moon investors feel doubly burned.
Even Safe Moon holders who have never used BitMart feel like the breach has indirectly burned them.
A United States Air Force veteran noted that when the hacker stole the safety moon coins and sold them all on the open market, he lowered the price of the entire project. “We are all affected by this,” he said.
The Safemoon Army is pressuring BitMart through a Twitter campaign designed to shame the exchange into complying with payment for victims of the hack. The safe moon contingent is powering the Twitter hashtag #WenBitMart, which started trending Monday night.
Although BitMart told CNBC it would support token exchanges, victims say that could cost them money.
One person said that if you liquidate your tokens on BitMart to USDT (a popular stablecoin pegged to the value of the US dollar), you would do so at a market position that is one-third of where your safe moon tokens are currently trading. You would also face a 10% fee for making the trade due to Safemoon’s trading requirements. (This 10% transaction tax serves as an incentive for users to continue to own the token, helping to put a floor below its price. It also funds the dividends that the token’s creators pay to holders as an incentive. additional).
Even if BitMart complies and pays everyone, it remains to be seen whether the exchange will buy back the lost equivalent assets at their current prices, which in some cases could be significantly higher..
Safemoon’s Global Product Manager is himself a BitMart customer. Ryan Arriaga says that 15% of his safe moon stash 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 many of these people involved are anonymous … People are knowing the space, they understand it more, they can read the contracts better,” 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 the safe moon army, we have such great support for what we are trying to achieve that it would not.” It does not turn off. It will not only add fuel to the fire. “
While BitMart clients wait for answers, some are biding their time to dive deep into the crypto exchange. CNBC took part in a Twitter Spaces chat on Wednesday night in which nearly 700 people discussed the situation.
BitMart closed a $ 13.7 million Series B funding round in late 2021 with a $ 300 million valuation, giving some pause to wondering how the exchange is equipped to self-finance $ 200 million repayments to clients. .
Others have asked why BitMart does not go through insurance to refund stolen funds. CNBC asked BitMart that question, and the exchange declined to answer.
CNBC also asked if the exchange was running an internal audit to assess whether something was in conflict within its own ranks, and again, BitMart chose not to answer that question.
The December hack affected two of BitMart’s “hot wallets”, but other assets were apparently “safe and unharmed.”
Cryptocurrencies can be stored “hot”, “cold” or some combination of the two. An active wallet is connected to the internet and allows owners relatively easy access to their coins so they can access and spend their cryptocurrencies. Compensation for convenience is potential exposure to bad actors.
The final and resounding concern among many BitMart users is that instead of stopping the trading of the affected and unsecured tokens, BitMart only stopped withdrawals. CNBC saw a video in which a person bought safe moon tokens on the exchange on January 5, long after the hack.