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An Iranian immigrant who lost $53,000 in a cryptocurrency hack claims he will be ruined if BitMart does not compensate him.

  • The victims of the $200 million BitMart theft say it's been five weeks since the crypto exchange promised to return their funds.
  • BitMart announced in early December that it will use its own funds to compensate victims of the massive security breach, which the exchange blamed on a stolen private key.
  • Many BitMart customers claim they have not been reimbursed in any way.

Victims of the $200 million BitMart theft say it's been five weeks since the crypto exchange promised to restore their funds, but many still haven’t seen a dime.

"I'm not one to whine and gripe," said Paul DeLong, an Austin business owner. "From a communication standpoint, BitMart stated that they would provide us with further information. We haven't gotten any information in a long time."

DeLong claims he has contacted the exchange several times, each time receiving a prepared response from a bot informing him that BitMart and its lawyers are "working on it."

BitMart announced in early December that it will use its own funds to compensate victims of the massive security breach, which the exchange blamed on a stolen private key.

Users, on the other hand, are growing impatient as they wait for BitMart to deliver on its promise.

We spoke with a number of BitMart users who were victims of the hack, some of whom are facing financial disaster if their assets aren't recovered.

"It doesn't matter if it's $20, $500, or $10,000; just communicate back to us and let us know," DeLong added.

Many of the victims lost a cryptocurrency token called safemoon, which was developed on the Binance Smart Chain platform. After a spate of celebrity endorsements from the likes of artist Lil Yachty and YouTuber Jake Paul, the currency enjoyed a significant run-up in the second quarter of 2021.

We inquired as to whether BitMart intended to follow through on its pledge to compensate victims. BitMart CEO Sheldon Xia's email address, which he provides on his unverified Twitter page, bounced back, as it did when we initially contacted him in early December.

"We will support any user withdrawals," a spokeswoman said. We're also speaking with a number of project teams to determine the best cost-effective alternatives, such as token swaps. Any additional information will be posted on our official website." More specific questions were not answered by the company.

Victims plead for transparency

More than a dozen BitMart users who were personally affected by the breach. A need for transparency was a recurring element in several of these discussions. The general consensus was that terrible news was preferable to no news.

One BitMart user, who claimed his tokens were being "kept captive," submitted a screenshot of his Telegram conversation with BitMart's admin. "We'll announce when there's an update," he was told Thursday evening when he asked if there was any more information on when he'd get his safemoon tokens back.

Mohamad, who prefers to be addressed by his first name, stated he is on the verge of committing himself as a result of his BitMart experience.

On his BitMart wallet, the Iranian refugee owns $53,000 worth of the safemoon token, $40,000 of which comes from a loan that he must repay with 4% interest.

The 38-year-old told that he works as a tow truck driver for a roadside assistance company from 7 a.m. to 10 p.m., seven days a week. He claims that his employer pays him a per-job commission rather than an hourly income, therefore he needs to work lengthy hours. He is paid $20 every task, but he is responsible for purchasing his own diesel fuel.

To carve out a future for himself in Canada, he began to invest in cryptocurrencies.

"I was simply thinking to myself, if I can build my money, I can go to school to learn English and go to college," Mohamad explained. "I don't have any money set aside."

Another BitMart user claims that his money is not at risk. His mother and mother-in-law pooled $30,000 and urged him to invest it on their behalf in BitMart.

"The freaking hack happened after I put it in, and I was going insane because I didn't have anything to give them," he explained.

Mr. Blik, a New York resident who begged not to be identified by his true name, says the timing could not have been worse.

"It happened right around the holidays... People are occasionally forced to sell some of their assets to cover expenses, such as Christmas gifts for their children. "Their incapacity to heal people produced a situation in which the freedom that we all seek was taken away from us," Mr. Blik added.

One crypto investor from Kansas, who has roughly $35,000 in BitMart, told that he wasn't overly concerned until recently.

"Holders had a broad understanding, even patience, that BitMart was simply waiting until after the first of the year to repurchase the stolen hot wallet tokens for tax reasons," he explained.

This same BitMart customer now claims to be in contact with about 6,800 BitMart customers who are considering bringing a class-action lawsuit against the exchange. They'll wait approximately a week before taking action.

The Safemoon Army is a force to be reckoned with.

The company's ambiguity has fueled the so-called "Safemoon Army," a group of safemoon token holders who have historically shown to be a formidable force when banded together for a common cause.

The BitMart hackers made off with a total of over 45 currencies, but safemoon tokens made up a sizable chunk of the haul. While some BitMart users have reported receiving reimbursements for saitama tokens, safemoon holders are still in the dark.

Investors in the Safemoon token who use BitMart claim they haven't received their "reflection" payments – a dividend-like bonus given to existing token holders — since November. As a result, BitMart's safemoon investors have been doubly burned.

Even safemoon holders who have never used BitMart feel the breach has harmed them in some way.

When the hacker stole the safemoon coins and sold them all on the open market, the price of the entire project fell, according to one US Air Force veteran. "This affects all of us," he remarked.

BitMart is being pressured by the Safemoon Army through a Twitter campaign aimed to shame the exchange into paying back victims of the attack. The #WenBitMart Twitter hashtag, which started trending on Monday night, is being promoted by the safemooners.

Although BitMart stated that token exchanges will be supported, victims claim that this might cost them money.

One user said that if he liquidated his safemoon tokens on BitMart to USDT (a popular stablecoin tethered to the value of the US dollar), he would do so at a market position one-third of where they currently trade.

Because of safemoon's trading regulations, he would additionally be charged a 10% fee for making the trade. (This ten percent transaction tax encourages users to keep the token in their possession, helping to maintain its price stable.) They also contribute to the token makers' dividends, which are paid to token holders as a bonus.)

Even if BitMart makes good and repays everyone, it's unclear whether the exchange will repurchase the same assets lost at current values, which might be much more in some circumstances.

BitMart is a BitMart customer, according to Safemoon's global head of products. Ryan Arriaga claims that BitMart holds 15% of his safemoon funds. However, he believes the trade will be beneficial.

"It's not like it was four or five years ago, when many of the people involved were unknown. People are becoming more aware of the space, they have a greater understanding of it, and they can read contracts more easily," Arriaga added.

"We've come so far now that I'm confident BitMart will follow through on their pledge and do the right thing.

We have so much support for what we're trying to achieve, especially with the safemoon army, that it won't die down. It won't just add to the conflagration."

Users dig deeper

While BitMart consumers wait for answers, some are betting big on the cryptocurrency exchange. On Wednesday night, we took part in a Twitter Spaces discussion in which almost 700 individuals debated the topic.

BitMart secured a $13.7 million Series B investment round at a $300 million valuation towards the end of 2021, prompting some to ask how the exchange will self-fund $200 million in user reimbursements.

Others have questioned why BitMart isn't reimbursing stolen monies through insurance. We posed the query to BitMart, which declined to answer.

We also inquired if the exchange was doing an internal audit to gauge whether anything had gone wrong inside its ranks, and again, BitMart opted not to respond to that question.

Two of BitMart's "hot wallets" were hacked in December, but the company's other assets were supposedly "secure and untouched."

Cryptocurrency can be kept "hot," "cold," or anywhere in between. A hot wallet is one that is connected to the internet that allows users to access and spend their cryptocurrency with relative ease. The cost of convenience is the risk of being exposed to bad actors.

Many BitMart users are concerned that, rather than halting trading of the affected and non-collateralized coins, BitMart has just halted withdrawals. On Jan. 5, well after the hack, one user purchased safemoon tokens on the exchange.