TL;DR
- BitMart published its first formal restructuring proposal to repay more than 12 million users with locked accounts.
- The exchange attributes the deficit to a December 2021 hack, now valued at $319.5 million, far above the $150 million reported at the time.
- Affected users will be able to choose between an immediate payment in liquid assets, a token tied to hack recovery, or a token backed by exchange assets.
BitMart published its first proposal to repay the more than 12 million users whose accounts have been locked since the exchange began shutting down its trading platform on July 26.
The document, released in the company’s help center more than two months after that closure, blames a hack that occurred nearly five years ago for the hole in its balance sheet.
The December 2021 security breach is now valued at $319.5 million, a figure that far exceeds the $150 million the company itself acknowledged at the time and the $200 million estimated by blockchain security firm Peckshield.
BitMart: The Hack that Explains Everything
Under the proposal, each account balance would be first converted to a dollar figure called a “Dollarized Account Balance“, calculated based on the average trading price of the user’s tokens between July 26 and a record date yet to be defined. A court-appointed officer will be required to verify that the figures are accurate.
From there, users will be able to choose from three options. The first is a proportional immediate payment on the exchange’s liquid assets, including cash, the stablecoins USDC, PYUSD and USDT, plus Bitcoin, Ethereum and Solana.
The second is a “Restitution Token“, where each dollar of the balance is converted into a unit tied to what BitMart manages to recover from the 2021 hack. Recent private forensic work reportedly identified “certain concentrations of value” at unidentified centralized exchanges.
The third option is a “Continuum Token“, which would trade on decentralized exchanges and derive its value from the exchange’s investments, the eventual sale of illiquid assets such as private equity stakes and altcoins, and a portion of future profits if BitMart manages to recapitalize.
Timelines and the Dispute with Echo Base
The exchange is working with restructuring firm Alvarez & Marsal and law firm White & Case. The timeline calls for consultations with the top 50 users by account balance over the coming weeks, general feedback in October, revisions in November, and a court filing in December or January.
Meanwhile, investment firm Echo Base, which says it submitted a proposal on August 6 for $10 million to fund a creditor-backed bankruptcy plan, claims BitMart never responded. The exchange, for its part, described the amount as “manifestly insufficient“. Echo Base has since formed a creditors’ committee and is evaluating whether it is possible to force the exchange into bankruptcy.
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