BitMart says it will compensate $196M to the Victims of the hack

Cryptocurrency exchange BitMart's hot wallets were compromised on 5th December, leading to a loss of $196M. The hackers managed to steal the wallets' private keys and stole $100M on the Ethereum blockchain and $96M on Binance Smart Chain.

Yesterday, the CEO of BitMart, Sheldon Xia, tweeted that the exchange would refund the users affected by the hack with its own funds.

2/4 BitMart will use our own funding to cover the incident and compensate affected users. We are also talking to multiple project teams to confirm the most reasonable solutions such as token swaps. No user assets will be harmed.

— Sheldon Xia (@sheldonbitmart) December 6, 2021

"BitMart will use our own funding to cover the incident and compensate affected users...We are also talking to multiple project teams to confirm the most reasonable solutions, such as token swaps. No user assets will be harmed." wrote Xia.

Generally, companies use cold wallets, meaning they store the private keys on hardware devices like USB drives designed to hold crypto assets. On the other hand, hot wallets are connected to the internet and allow for faster transactions, but the trade-off here is security, as hot wallets are more vulnerable.

Analysts say that the attacker swapped tokens through an exchange called 1inch to swap to ETH. These coins were then deposited into a privacy mixer known as Tornado Cash, making money harder to trace.

Pretty straightforward: transfer-out, swap, and wash @sheldonbitmart pic.twitter.com/LyA03sbgCZ

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

The founder says that the team is looking into the issue, and all the functions on its platform, like deposits and withdrawals, will be available from today.