//Bankrupt Crypto Exchange FTX Is Investigating A Potential Hack Worth Millions

Bankrupt Crypto Exchange FTX Is Investigating A Potential Hack Worth Millions

Crypto exchange FTX on phone

Sergei Elagin/Shutterstock

Merely days after cryptocurrency exchange FTX filed for bankruptcy and attracted regulatory attention, the company indicates it was hacked and that funds potentially worth hundreds of millions of dollars may have been stolen. FTX legal counsel Ryne Miller shared a statement from new FTX CEO John Ray on Twitter, who claimed “unauthorized access to certain assets has occurred,” also noting that the company took immediate steps to control the damage. Ray, who replaced founder and former CEO Sam Bankman-Fried following a failed Binance acquisition, said the company was working with law enforcement authorities to handle the situation. 

Meanwhile, crypto risk management firm Elliptic claims that within a day of FTX officially filing its bankruptcy papers, a message was circulated in the FTX Telegram channel warning users about an ongoing hack (via Twitter). In total, a sum of $663 million is said to have been swiped from FTX wallets, of which $477 million was reportedly stolen while the rest was allegedly put in cold storage for safety by FTX after the hack was confirmed.

I was looking at the FTX Tron accounts now and there was a funny thing how the alleged hackers (or internal team) were moving the funds out.

They first moved all TRX out from there and then they were trying to move 47M USDT out but there was no trx for energy fees anymore 1/4

— Tobias Silver (@TobiasSilverJM) November 12, 2022

Out of the “stolen” crypto loot, assets worth $278 million were in the form of Ethereum, while the rest was in Solana, Binance Smart Chain (BSC), and Avalanche tokens. Interestingly, Nick Perococo — who is the Chief Security Officer at crypto exchange Kraken — wrote on Twitter that he knew the identity of the user who moved the stolen funds.

The damage could be even bigger

Trading crypto FTX exchange mobile

Nikita Burdenkov/Shutterstock

However, it appears that the scale of the alleged theft is bigger than what was initially reported by Elliptic. According to CoinDesk, the total amount stolen from FTX’s crypto wallets could be well over $600 million. The timing of the hack is rather interesting and has fanned all forms of speculations and conspiracies on social media.

FTX just released this message on their Telegram channel.

It looks like they are claiming it is a hack and the FTX wallets are being looted tonight.

There is a bankruptcy freeze in place. The bankruptcy trustee says he is not involved in what is happening tonight. pic.twitter.com/VjVNfHL91p

— Wall Street Silver (@WallStreetSilv) November 12, 2022

Bankman-Fried reportedly moved customer funds away from FTX, in secret, of which anywhere between $1 billion and $2 billion is now unaccounted for. The former FTX CEO is alleged to have set up a “backdoor” in FTX’s book-keeping system that allowed him to play with the financial records of the company without alerting anyone inside or outside the company, according to Reuters.

In his defense, Bankman-Fried told Reuters, “We didn’t secretly transfer,” and that the whole fuss around missing $10 billion in customer funds was a result of “confusing internal labeling.” California’s Department of Financial Protection has launched an investigation into FTX. In the Bahamas, where FTX is based, the Bahamas Securities Commission is also working with the local police to assess allegations of criminal misconduct (via Fortune).