Bitmart Asks New York Judge To Prevent Hackers From Selling Fake Bitcoin SV On Its Platform



Crypto exchange Bitmart’s owner has asked a New York judge to intervene to prevent hackers from selling the fake Bitcoin SV (BSV) on its platform.


It has been reported that the company has argued that the Southern District Court of New York nonetheless has jurisdiction over "fraudulent or manipulative acts with foreseeable effects in New York'' and is therefore requesting that the judge intervene before the hackers are able to sell the illicit crypto on the open market.


However, the bid, reportedly heavily redacted, claims that the funds will be significantly harder to recover on behalf of affected users if there is no intervention. Bitmart claims that the hackers defrauded a minimum of 43 of its users in the United States by minting fraudulent BSV in violation of the US Commodities and Exchange Act.


The report said that the Switzerland-based Bitcoin Association first detected the fraudulent coins on July 8. They were reportedly generated through a block-reorganization attack on the Bitcoin SV network, i.e., illegitimately forking the blockchain to facilitate the double-spending of coins.

Likewise, Bitmart has reportedly identified fraudulent transactions associated with the attack to at least eight other crypto exchanges, including Binance, Huobi, OKEx, and Kucoin. GBM has strengthened its appeal to the New York judge by noting that it has been able "to identify at least two fraudulent transactions by Defendants with two New York users of its cryptocurrency exchange."


It has been analyzed that GBM has further claimed that the hackers have "transferred the cryptocurrency to other exchanges serving New York customers with the intent to sell them," adding that "if they are permitted to undertake such sales, they will almost certainly transact with New York-based counterparties."


GBM stated:

"Defendants are foreign, impossible-to-identify hackers intent on fraud, there is almost no likelihood that they would pay a damage award. Short of receiving an injunction of already-identified, fraud-begotten cryptocurrency, there is no way for Petitioner to secure ultimate recovery."

Thus, in 2020, the most prominent case involved the Singapore-based exchange KuCoin, although other smaller hacks affected the Italian platform Altsbit, among others.


Source: Cointelegraph | Image: Medium | Law