February 8, 2023

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Bankrupt crypto exchange FTX is scrambling to stabilize any funds it still has after being “hacked”.

The shell of the fallen crypto exchange FTX can’t do much anymore, but it’s trying to get its hands on any remaining funds that can be tracked down and quarantined somewhere where they won’t be arbitrarily transferred elsewhere or by a hacker can be skimmed off. This follows a spate of information that has emerged over the past day that has painted a picture of a financial institution mired in unprecedented chaos on seemingly every possible level.

For his part, FTX founder and recently resigned CEO Sam Bankman-Fried “really regrets it”.

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On Saturday, Bankman-Fried (who also drives from SBF) rushed to quash rumors circulating on Friday that he had fled to South America. He claims he’s still in the Bahamas, where FTX is headquartered.

No less than $1 billion in customer cryptocurrencies have apparently disappeared from FTX. And as a kind of icing on the cake, FTX may have been infiltrated by hackers on Friday night and robbed of $473 million. What remains of the company, according to its own tech support channel, is a largely unusable and potentially unsafe website that could steal users’ money.

Backtracking a bit: According to anonymous sources speaking to Reuters and the Wall Street Journal yesterday, Bankman-Fried transferred the equivalent of $10 billion from FTX to an FTX-affiliated trading house called Alameda Research, also founded by Bankman-Fried and now is down.

It now looks like these money movements played a role in Binance CEO Changpeng Zhao now infamous anti-FTX tweetstormtelling millions of people that “recent revelations” have caused his company to essentially lose all faith in FTX.

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But the newly revealed missing $1 billion appears to be an unaccounted for portion of the $10 billion that was moved to Alameda. Both FTX and Alameda Research were already under investigation by the Securities and Exchange Commission when all of this was released.

Amid these revelations late Friday night — or, who knows, maybe because of them — came an additional announcement on the company’s tech support Telegram account: “FTX has been hacked. FTX apps are malware. Delete them. The chat is open. Do not go to the FTX site as it may download trojans.”

Adding additional credibility to Telegram messages was a Tweet from FTX General Counsel Ryne Millerwho said he was “investigating anomalies in wallet movements related to the consolidation of FTX balances between exchanges.”

Sheer speculation from high profile accounts on crypto twitter has suggested that it is indeed a hack one or more FTX Insiders, taking whatever they can extract from FTX’s corpse on the way to the door.

On Saturday afternoon, ET, Miller tweeted a statement by John Ray, FTX’s newly appointed crisis CEO tasked with stabilizing the burgeoning company.

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According to Ray, the company is now trying to secure “all assets, wherever they are” from “unauthorized access”. According to Ray, FTX is now moving towards ceasing trading and fund withdrawals and moving all cryptos to a “cold wallet custodian” where the funds are not easily accessible, but at least will not suddenly disappear.

Oh and the police were notified, according to Ray. And in addition to law enforcement, an internal “fact check and mitigation action” was immediately initiated in response to the hack, he explained.

In other words, FTX is trying to find the guy who did this.