A Federal Trade Commission (FTC) investigation into crypto exchange BitMart over December’s $200 million security breach will press on.
The probe, reportedly the FTC’s first known enquiry within the crypto industry, was detailed in an FTC order made Wednesday.
FTC commissioners recently denied the operators’ petition to stop demands for certain company documents, which would help them determine whether BitMart operators engaged in unlawful practices and marketing.
BitMart suffered a security breach in December 2021, which involved two of its crypto hot wallets being commandeered and troves of tokens belonging to its customers going missing.
Sheldon Xia, CEO of the exchange, said a company private key was used to withdraw the funds and promised to make users whole.
In May, the FTC subpoenaed Bachi.Tech Corporation and Spread Technologies in order to seek information on the companies’ communication to customers about the security of their cryptoassets.
Both operators claimed the FTC’s Civil Investigative Demand (CID) asked for irrelevant information that would unlikely lead to material evidence.
Bach.Tech also claimed the regulator’s requests were “unduly burdensome” — an assertion that the FTC knocked down. “The process recipient must show how responding to the CID request would impose a significant disruption to its business operations,” it said in the order.
The FTC is also investigating both operators under Gramm-Leach-Bliley Act, which requires financial institutions to disclose their information-sharing practices with customers.
Founded in 2017, BitMart is a digital asset exchange registered to the Cayman Islands. Daily trade volume on the platforms, one of the industry’s smaller outfits, recently stood at $4.8 million, CoinMarketCap data shows.
Bachi.Tech did not return Blockworks’ request for comment by press time, while Spread Technologies could not be reached.
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Source: https://blockworks.co/ftc-probe-into-200m-bitmart-hack-continues-after-doc-block-denied/