Funds disappear from failed crypto exchange FTX; probe running

Funds disappear from failed crypto exchange FTX; probe running

Cathy Bussewitz, The Associated Press

Posted Saturday, November 12, 2022 8:13 PM EST.

NEW YORK (AP) – Folded cryptographycurrency trading company FTX confirmed there was “unauthorized access” to its accounts, hours after the company filed for Chapter 11 bankruptcy protection on Friday.

This was said on Saturday by the company’s new CEO, John Ray III FTX It is disabling the ability to trade or withdraw funds and is taking steps to secure customer assets, according to a tweet. FTXRyne Miller General Counsel. FTX It is also coordinating with law enforcement and regulators, the company said.

Exactly how much money was involved is unclear, but analytics firm Elliptic estimated on Saturday that $477 million was missing from the exchange. Another $186 million was withdrawn FTXbut that could be it FTX moving assets into storage, said Tom Robinson, Elliptic’s co-founder and chief scientist.

Controversy on social media, whether the exchange was hacked or whether funds were stolen by a company insider, this possibility cryptographycurrency analysts could not ignore it.

Until recently, FTX It was one of the biggest in the world cryptographycurrency exchanges It was short of a billion dollars when it filed for bankruptcy protection on Friday and its former CEO and founder, Sam Bankman-Fried, resigned.

The company valued its assets at between $10 billion and $50 billion, and listed more than 130 affiliated companies worldwide, according to its bankruptcy filing.

The disbanding of the once-giant exchange is sending ripples through the industry, along with the companies that backed it FTX investments and falling prices of bitcoins and other digital currencies. Politicians and regulators are calling for tighter oversight of the increasingly difficult industry. Experts say the saga is still unfolding.

“We will have to wait and see what happens fell down is, but I think we’re going to see more dominoes fall and a lot of people are going to lose money and savings,” said Frances Coppola, an independent financial and economic commentator. “And that’s tragic, really.”

The timing and extent of access the alleged hacker gained, siphoning money from various parts of the company, led Coppola and other analysts to theorize it may have been an inside job.

FTX It said on Saturday that it is moving many identifiable digital assets to a new “cold wallet custodian,” which is essentially a way to store assets offline without allowing remote control.

“It appears that the liquidators did not act quickly enough to stop any diversion of funds. FTX after filing for bankruptcy, which is bad, but it shows how complex this thing is,” Coppola said.

In the beginning, some people may be liquidators or bankruptcy trustees trying to move all the missing funds to a safer place. But it would be unusual for that to happen on a Friday night, said Molly White, cryptographycurrency researcher and member of the Harvard University Library Innovation Lab.

“It looked very different to what a liquidator might do if they were trying to secure funds,” he said.

White also said there are indications of possible insider involvement. “It seems that someone who is not an insider could pull off a major hack with that much access. FTX systems”.

the collapse of FTX highlights the need cryptographyCoppola said that the currency should be regulated more like traditional finance.

“Crypto is no longer very early stage,” he said. “We have ordinary people putting their life savings into it.”

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