Bittrex Exchange sued for Alleged Involvement in $1M Bitcoin Theft

Gregg Bennett, a Seattle-based angel investor and bitcoin ‘hodler’ has dragged Bittrex cryptocurrency exchange to court for allegedly aiding a SIM swap attack that allowed hackers to steal his 100 BTC ($923,700). Bennet alleges that he exchange failed to promptly take action when it was first notified of the hack, according to reports on November 4, 2019.

Bitcoin Big Whale Sues Bittrex Exchange

In another ugly scenario in the crypto space, Gregg Bennett, a victim of a high profile SIM swap attack that enabled rogue actors to steal 100 BTC from his Bittrex account, has filed a lawsuit against the Seattle-based exchange.

Per sources close to the matter, in a lawsuit filed in King County Superior Court of Washington, Bennett alleges that Bittrex exchange went against its published security protocols, ignored the laid down crypto industry standards and failed to take the necessary action immediately it was notified of an ongoing heist on his account on April 15, 2019.

The victim claims the hackers initiated the attack from a Florida IP address, and an NT operating system, two red flags that should have alerted the exchange that unauthorized persons were trying to tamper with his wallet since he has never used both.

An Inside Job?

Though authorities handling the case are yet to press criminal charges against Bittrex, the financial legal examiner for Washington’s Department of Financial Institutions, an agency in charge of handling consumer complaints, has made it clear that Bittrex did not act upon Bennett’s notice in a timely manner, thereby violating its own terms of service.

What’s more, in addition to faulting Bittrex’s inability to quickly discover suspicious activities in his account, Bennet’s lawyers have also condemned the exchange for its failure to impose a 24-hour withdrawal embargo on the account due to the password change, as obtainable on several other bitcoin trading venues.

It will be recalled that the New York Department of Financial Services (NYDFS) rejected Bittrex’s BitLicense application earlier in April 2019, citing the exchange’s lack of robust measures to combat illegal activities such as money laundering and others.

While Bennett did not name his phone carrier, AT&T in the lawsuit against Bittrex, he has however hinted that he feels the SIM swap attack was actually orchestrated by an employee of the telecoms operator, since his account PIN and Social Security number were changed and that can only be done by an insider.

It’s worth noting that AT&T has been involved in several SIM swapping cases of late and it now appears there is somehing the phone network is not doing right.