BitMart wins arbitration award over July 2021 hack

Quick Take

  • The owner-operator of crypto exchange BitMart has won an arbitration award over a July 2021 hack that drained it of $6 million.
  • The respondents allegedly used a 51% attack to fool BitMart into crediting them BSV tokens.

The owner-operator of crypto exchange BitMart has won an arbitration award over a July 2021 hack. 

A May 2 award of arbitrator notice sided with GBM Global Holding Company Limited, the parent company of BitMart, in an attempt to reclaim funds stolen in an attack of the Bitcoin Satoshi Vision (BSV) blockchain.

In July of last year, the 92 respondents named in the arbitration registered accounts with BitMart before carrying out a 51% attack of the BSV blockchain. In this type of attack, users take over the mining capabilities of a blockchain, leveraging more than half of the mining power, which allows them to mine faster than other users and affect transactions.

In this case, the respondents allegedly implanted a number of fake transactions that made it appear they held 91,000 BSV tokens. The sham transactions fooled BitMart into crediting them the BSV tokens in their linked wallets. The attackers then traded the BSV into other cryptocurrencies at a value of more than $6 million, thought BitMart did manage freeze some of the accounts. 

Arbitrator Dani Schwartz awarded damages for each withdrawal of crypto from a respondent account to be paid within 45 days of the award. The exact amount is worked out as follows: 

"Such damages are to be calculated in United States dollars (“Dollars”) at the cryptocurrency-Dollars exchange rate prevailing as of the close of business on the date of this Award," specified the order. "The specific cryptocurrencies (identified by ticker) and withdrawal amounts against which these damages are to be calculated are as follows: BSV 3.07; BTC 10.9946; ETH 218.929; USDC 296,654.277; USDT 693,721.37; XRP 3,926,159.284; ADA 130838.17; DOGE 485; ETC 0.389; HOT 29,912,899; LTC 668.499; MATIC 297,691; XEM 313.94; XLM 969,308.31; and ZEC 0.3487."

The award notice was filed on June 21 with a proposed judgment that respondents shall pay $5,231,549.42 based on the damages calculation laid out in the arbitration award.

If a judge signs the order, the third party exchanges that attackers used to change the funds will receive an order calling for them to turn over any frozen assets to BitMart. 

BitMart experienced a separate, larger hack in December of 2021 resulting in the loss of $150 million in crypto. 

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