$196M Lost in BitMart Hack, Crypto Analysts Warn More Will Come

Richard Marley
December 07, 2021
3 minutes read
2218

BitMart, one of the world’s largest cryptocurrency exchanges, lost $196 million in a recent hack due to ineffective compliance infrastructure.

Crypto analysts have warned that cryptocurrency technologies have made it easier for fraudsters to hide their tracks after successfully stealing $196 million from crypto exchange “BitMart”.

The exchange is the world’s 118th largest cryptocurrency provider, based on client traffic, trading volumes, liquidity, and customer trust. However, BitMart customers’ confidence has shattered after the exchange announced it had fallen prey to cybercriminals.

“We have identified a large-scale security breach related to one of our [ethereum] hot wallets and one of our [Binance] hot wallets today,” BitMart confirmed in a statement on Saturday. “At this moment we are still concluding the possible methods used.”

The cryptocurrency exchange estimated that masterminds of the multi-million dollar hack had fled with nearly $150 million in digital currency. However, blockchain security experts later pointed out that the theft was around $196 million.

The crypto heist was first noticed by the cyber experts when an unusual flow of $10 million was detected from exchange to an anonymous address. BitMart stated that the hack had only affected “a small percentage of assets on BitMart and all of our other wallets are secure and unharmed.”

“We are now conducting a thorough security review and we will post updates as we progress,” BitMart added. “At this moment we are temporarily suspending withdrawals until further notice.”

It’s ambiguous how the hackers broke into BitMart. However, the security companies said that the cybercriminals used the transfer-out, swap, and wash approaches to overcome the risk of getting traced. The cybersecurity analyst also stated that due to insufficient infrastructure criminals are able to easily hack into crypto exchanges for their financial gains.

“The technology underpinning cryptocurrencies makes it far too easy to steal large sums of money, often leaving little or no trace as to where the money has gone or who has stolen it,” Jake Moore, cybersecurity specialist at ESET. “Sending funds to an ethereum mixing service is common for those wanting to evade being followed by the authorities, so better initial prevention for those with digital funds is vital to help mitigate this growing trend.”

“Users can add layers of protection such as 2FA and remain on guard against cleverly targeted phishing emails but crypto exchanges could potentially add extra layers of security when money is requested. Multiple verification techniques over certain amounts of money can slow thieves down and potentially reduce or even prevent the money from being taken”, Jake said.

BitMart was warned before this hack that cybercriminals can take over the security systems due to the absence of Know Your Customer (KYC) practice, thus making it difficult for the regulatory bodies to track down criminals.

Therefore, financial regulators across the globe are now determined to come up with more strict laws and policies to halt the usage of digital currencies in financial crimes.

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ASIC Expands its Team to Enhance Cryptocurrency Regulations
Australia’s financial regulator has enhanced the size of its crypto team. The crypto regulatory measures include their application for financial services licenses and show that specific crypto platforms have particular liquidity in reserve.

After shifting popular blockchain from a proof-of-work (PoW) to a proof-of-stake (PoS) system, ASIC, Australia’s financial regulator, has increased the size of its crypto team.

U.S. Security and Exchange Commission Chairman Gary Gensler stated that PoS-based tokens might be classified as securities.

The decision of ASIC to keep PoS tokens for example Ethereum, Cardano and Solana under its remit will further clarify the situation and enable crypto regulations to be more effective. To cope with the latest regulatory reforms, the crypto exchange must either delist the tokens or start complying with robust crypto laws.

Such moves may force a few crypto firms to manage their operating models. Even the largest stablecoin of the crypto market, Tether, has been caught in a controversy created over the failure of holding enough dollar reserves to back the stablecoin.

The crypto regulatory measures include their application for financial services licenses and show that these platforms have particular liquidity in reserve.

The final decision by the regulator has not been issued yet. Greg Yanco, the executive director for marketers, said that ASIC won’t be a “cheerleader for crypto assets.”

SEC Newgate carried out research the last November. It showed that 44% of Australian retail investors reported holding crypto. Out of these investors, only 20% viewed crypto as high-risk.

The chairperson of ASIC responded and said that the regulators were “concerned that there are limited protections for crypto-asset investments given they have become increasingly mainstream and are heavily advertised and promoted. There is a strong case for regulating crypto-assets to better protect investors.”

According to Yanco, until the last year, cryptocurrency was not such a high priority. Still, due to the decline of cryptocurrency in the previous few years and investors wiped out around the globe, ASIC expanded its team. It made crypto one of its “core strategic projects.”

Suggested Read: Regulatory Authorities to File a New Bill to Secure the Citizens from Cyber Criminal Activities

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$196M Lost in BitMart Hack, Crypto Analysts Warn More Will Come

Forensic Document Verification – A New Standard

How Forensic Document Verification is Carried Out?

High-Profile Crime Cases of Document Fraud

Gang Arrested for Printing Fake Documents in Greece

Criminal Network Busted for Distributing Fake Documents

Regulatory Authorities Monitoring Document Fraud

Canada

Australia

Document Forgery Forensic Authentication – Ensuring KYC Compliance

What Shufti Pro Offers?

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Let’s prove your customer’s

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