Hundreds of millions of customer dollars were mysteriously stolen from cryptocurrency exchange FTX which had a major meltdown last Friday, company executives have referred to it, as,“WE WERE HACKED.”
FTX a company in freefall, both financially and reputationally, issued a statement last Friday that it was investigating a spate of “somewhat abnormal” asset transfers spread across hundreds of accounts. By all accounts, more than $500 million may have been stolen.
The chaos began Friday night when FTX customers began taking to Twitter to say their funds were missing. In the evening, an administrator on the exchange’s Telegram page posted the following statement:
- FTX has been hacked. All funds appear to be gone.
- FTX apps are malware. Delete now.
- Do not log in to the FTX site, as it could download Trojans.
A short time later, Ryne Miller, the company’s general counsel, tweeted: “We are investigating anomalies with various movements in customer wallets.”
Soon after, Miller said the company was taking precautionary measures to move all digital assets to cold storage, offline accounts that keep assets safe from hacking, in an attempt to prevent further funds from being transferred.
Elliptic, a company that tracks cryptocurrency movements on the Internet, said it had recorded movements of more than $701 million from the exchange’s coffers on Friday night. In its analysis, Elliptic assessed that some $515 million in assets may have been stolen, while another $186 million represented assets that FTX had transferred to cold storage. Another blockchain analytics firm, Nansen, estimated that about $659 million left FTX between Friday and Saturday.
This happened less than 24 hours after the company filed for bankruptcy, as expected it immediately aroused the suspicions of customers and non-customers, with many suggesting that this was not “hacking,” but some sort of attempt by FTX to scam customers and steal what it could.
FTX, which was once considered one of the most promising companies in the cryptocurrency industry and had a host of celebrity endorsements including Tom Brady and Steph Curry. The company’s CEO, Bankman-Fried, resigned from his leadership position on Friday as it was revealed that the company had been using customer money to fund their own trading activities and was insolvent.
A huge amount of client money also vanished before the “hacking” problem. Reuters reports that Bankman-Fried transferred some $10 billion in FTX client funds to his own firm, Alameda Research. Of that sum, at least $1 billion reportedly vanished into thin air. It’s unclear where it went or what the total amount of missing funds is.
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