FINXFLO terminates relationship with BitMart following stolen tokens episode
Singapore based DeFi/CeFi liquidity and protocol aggregator FINXFLO has issued a brief note entitled FINXFLO moves on from BitMart, indicating that it is terminating its relationship with the offshore crypto exchange.
The Backstory:
BitMart was hacked on an early Sunday morning in December last year.
More than a million FXF tokens were stolen on Dec 5th, 2021, shortly after 6am, and subsequently sold 2.5 hours later on Uniswap for 38.7 ETH.
FINXFLO said that it had no choice but to suspend trading of the FXF token on its platform until it fully understood the situation and came to a resolution with BitMart.
The Aftermath:
FINXFLO said that it reached out in good faith to BitMart, to agree on a schedule to replace the stolen tokens, which would allow the community to resume trading of FXF.
Unfortunately, the company said that it was unable to come to a satisfactory resolution.
FINXFLO subsequently took the view that BitMart was no longer an appropriate exchange partner,, and took steps to terminate its relationship with them.
What Happened Next:
FINXFLO said its compliance team was in constant communication with BitMart to return the tokens, and they were fully returned as of Jan 31, 2022. These tokens were bought back from the open market.
The company noted that it is continuing to communicate with BitMart to remove its token from their platform and fully terminate the relationship.
What we learnt, according to FINXFLO :
Trust with our crypto community is non-negotiable.
This incident has reinforced the need to waterproof our due diligence on our exchange partners, especially with activities around the FXF token. We are also enhancing our counterparty risk monitoring.
Ramping Up Due Diligence Controls:
FINXFLO said it is implementing a robust venue selection process benchmarked against the Best Execution requirements outlined in the EU’s Markets in Financial Instruments Directive (MiFID II).
This process is designed to assess exchanges, other venues, and liquidity providers based on fundamentals such as pricing, available liquidity, as well as speed and likelihood of execution.
In addition, the company said it will be monitoring the reputational risk surrounding venues more closely and will be actively monitoring social channels to detect potential negative narratives surrounding venues, before engaging with them further.