The crypto exchange FTX, which recently filed for bankruptcy, is now dealing with another blow. According to the officials from the firm, crypto assets worth millions of dollars might have been hacked from the exchange. Following this, FTX decided to move all its digital assets into offline storage to prevent any hacking attempts.
FTX’s general counsel, Ryne Miller, took it to the micro-blogging website Twitter to confirm this news. He further stated they had taken the necessary precautionary steps by moving all digital assets to offline storage.
This means the assets are now stored in a storage that is not connected to the internet. This happened on Saturday, just a day after the firm filed for bankruptcy on Friday.
Continue reading as we explore other aspects of the latest hack in the FTX exchange. Let’s get started.
The FTX Backstory: What Went Down With One Of The Greatest Exchanges?
If you are someone with even the slightest interest in the crypto industry, you have undoubtedly heard of FTX. Being one of the largest crypto exchanges, FTX was making headlines for good reasons at the start of the year. First, the firm came to the rescue of many crypto projects that were suffering from liquidity crunches.
Sam Bankman Fried, the former CEO of the platform, took out many loans to buy off these crypto companies that were suffering in the bearish market. These companies include Voyager Digital, Celsius Network, and even the crypto hedge fund Three Arrows Capital. Following this, many even regarded Mr. Bankman Fried as a savior of the crypto industry.
Besides that, FTX was very popular among many celebrities as well. Some celebs who have earlier endorsed FTX include big names such as Steph Curry and Tom Brady. These endorsements were highly effective as they helped FTX win over the trust of numerous users from all over the globe. Many even went on to call FTX the Enron of the crypto industry.
But recent revelations turned the tides against FTX. CoinDesk, one of the leading crypto publishing houses, recently released a report with the leaked balance sheet of Alameda Research, FTX’s sister company. The report highlighted that Alameda Research relied heavily on FTT tokens which are FTX’s native currency.
This triggered a cascading effect that resulted in devastating consequences for FTX and the crypto industry. There were talks of Binance acquiring FTX amidst this liquidity crunch, but even this deal fell apart after due diligence. Ultimately, FTX had no option but to file for bankruptcy, and Sam Bsankman Fried resigned from his position as the company’s CEO.
FTX Faces Another Blow Of Millions
While all this was happening, another chaotic development unfurled later this Friday (12th November). Many FTX users suddenly complained that their funds were disappearing from their accounts. At exactly 11:52 p.m., an admin for the Telegram page of FTX posted that FTX had been hacked and all funds were disappearing; he further added that the FTX app had malware and that everyone must delete them. He also asked people not to open the FTX website since it might download Trojans.
Soon after this, Ryne Miller, the general counselor of the company, confirmed the same news through Twitter. However, there was no explanation for why and where the funds were going. But a follow-up tweet from the same general counsel claimed that the company was routing all remaining funds into cold storage. This was done to prevent any further loss of funds since hackers cannot access storages that are not connected to the internet.
Soon Elliptic, an agency that tracks the movement of cryptocurrencies on the internet, said it had recorded funds worth $701 million leaving the exchange. These funds were in different tokens, and all of that was playing out on Friday when FTX filed for Chapter 11 bankruptcy.
The analysis from Elliptic assessed that assets worth $515 million were stolen from the exchange. Besides that, $186 million was the asset FTX was transferring to cold storage to prevent further damage to an already struggling crypto asset.
But this was not the only report on the matter. Nansen, another Blockchain analytics firm, estimated that funds worth $659 million were siphoned from FTX from Friday to Saturday. This transfer included many tokens, including Ethereum, Avalanche, Solana, and even Binance Smart Chain.
The amount was transferred to three different wallet addresses. Following this, the transferer routed at least $220 million through decentralized exchanges. According to Elliptic, hackers use this pervasive tactic to avoid seizing stolen assets.
This short period of 24 hours was like an entirely thrilling episode for crypto stakeholders. Many even went on to theorize and claim that the actual hack was staged and not a real one. People online said this was an attempt to rip off users by the so-called insiders running the FTX exchange. Social media buzzed with claims that Sam Bankman Fried is the mastermind behind this apparent theft.
These claims are hard to dismiss, given this is not an isolated incident that happened just now. Even before this recent hack, customers’ money went missing without their consent or knowledge. Reports suggest that Bankman Fried transferred customer funds worth $10 billion from FTX to its sister company Alameda Research.
A Major Piece Of The Pie Goes Missing In Thin Air – What’s Next?
One billion from this $10 billion went missing without a trace. Besides that, reports also state that no information or indication justifying how these funds were stolen or what the total figure was. However, there are some estimates from experts on the matter that indicate the total of the missing funds could be anywhere between one to two billion dollars.
According to a report from the publishing house Reuters, a source told the outlet that the missing funds were worth $1.7 billion. According to the two sources, Reuters reported, “The financial hole was reflected in Bankman-Fried’s shared records with other senior executives last Sunday.
They said the records provided an up-to-date account of the situation. Both sources held senior FTX positions until last week and said they were briefed on the company’s finances by top staff.”
Considering the latest flow of events, it’s evident that FTX and the entire crypto market haven’t been in a good state. So what happens next in this winter market would be a sight for investors and traders.
What’s your opinion about the next few days in the market?
