Assets worth hundreds of millions of dollars inexplicably vanished from the failing cryptocurrency exchange FTX on Friday, according to exchange officials, in what may have been a “hacking” event.
The once-respected and heavily promoted cryptocurrency exchange said Friday that it was investigating a barrage of “abnormal” asset transfers sweeping through accounts. The company is already in a spectacular state of financial and reputational free fall. A further examination seems to indicate that up to $500 million might have been stolen.
The chaos started late Friday when FTX account holders began taking to Twitter to allege that their funds had disappeared. At 11:52 p.m., an admin for the exchange’s Telegram page posted the following statement:
Ftx has been hacked. All funds seem to be gone.
FTX apps are malware. Delete them…
Don’t go on ftx site as it might download Trojans.
Not long afterward, Ryne Miller, the company’s general counsel, tweeted: “Investigating abnormalities with wallet movements related to consolidation of ftx balances across exchanges – unclear facts as other movements not clear. Will share more info as soon as we have it.”
Shortly after, Miller alleged that in an effort to restrict further transfers of funds, the business was diverting any remaining funds into cold storage—the offline accounts that protect assets from hacking.
The coffers of the cryptocurrency exchange were emptied of more than $701 million in various tokens on Friday night, according to Elliptic, a company that monitors cryptocurrency transactions online. According to Elliptic’s investigation, $515 million in assets may have been taken, and another $186 million in assets may have been put by FTX into cold storage. A number of tokens, including Solana, Ethereum, Tron, Avalanche, and Binance Smart Chain, were used in the transferred funds. Three different wallet addresses were used to hide the funds, and at least $220 million was then transferred through decentralized exchanges, which Elliptic describes as a “typical method employed by thieves wanting to prevent confiscation of the stolen assets.” Less than 24 hours after the company filed for chapter 11 bankruptcy, the timing of the entire incident immediately raised suspicions online. Many people suggested that this wasn’t a true “hacking” episode but rather an attempt by FTX insiders to defraud clients and steal half a billion dollars. Some hypothesized that a small group of Sam Bankman-Fried, CEO of FTX, were responsible for the alleged heist.
ÒFTX, formerly regarded as one of the most promising businesses in the cryptocurrency sector and boasting endorsements from a number of celebrities including Tom Brady and Steph Curry, has exploded in a spasm of fraud that some have compared to the cryptocurrency version of Enron. Bankman-Fried, the company’s CEO, resigned from his job on Friday in the wake of disclosures that the company had been using customer funds to finance its own dangerous trading activities and was insolvent.
Additionally, a huge sum of customer money appears to have vanished before the most recent “hacking” incident. According to Reuters, at least $1 billion of the $10 billion in client funds that Bankman-Fried previously transferred from FTX to his own business, Alameda Research, is alleged to have disappeared into thin air. According to Reuters, it’s unknown where the money went or how much overall money is gone, although some estimates place the value of the lost assets at between one and two billion dollars. The amount, according to a source, should be $1.7 billion. Reuters claims:
The financial hole was revealed in records that Bankman-Fried shared with other senior executives last Sunday, according to the two sources. The records provided an up-to-date account of the situation at the time, they said. Both sources held senior FTX positions until this week and said they were briefed on the company’s finances by top staff.
