Money disappeared at the bankrupt crypto exchange FTX; exploration is underway

Crashed crypto exchange FTX confirmed it had “unauthorized access” to its accounts, hours after the company filed for Chapter 11 bankruptcy protection on Friday.

Congestion CompanyNew John Ray III CEO said Saturday that FTX will shut down the ability to trade or withdraw and take steps to secure customer assets, according to a tweet by FTX general counsel Ryne Miller . FTX is also collaborating with executive and regulators, the company said.

It’s unclear exactly how much is involved, but analytics firm Elliptic estimated Saturday that $477 million was missing from the exchange. Tom Robinson, Elliptic’s co-founder and chief scientist, said another $186 million was moved out of FTX’s accounts, but that could be because FTX moved assets to storage.

A debate formed on social media as to whether the exchange was hacked or whether someone inside the company stole the funds, a possibility that crypto analysts cannot rule out.

Until recently, FTX was one of the largest cryptocurrency exchanges in the world. It was short of billions of dollars when it sought bankruptcy protection on Friday and its former CEO and founder, Sam Bankman-Fried, resigned.

The company has valued its assets between $10 billion and $50 billion and lists more than 130 affiliated companies around the world, according to bankruptcy.

The unraveling of the once giant exchange is sending shock waves through the industry, with FTX-backed firms writing down investments and the price of bitcoin and other cryptocurrencies falling. Politicians and regulators are calling for closer scrutiny of the unwieldy industry. Experts say the story is still ongoing.

“We will have to wait and see what the consequences are, but I think we will see a lot of dominoes fall and a lot of people will lose money,” said Frances Coppola, an independent financier and economist. and their savings”. commentator. “And that’s just tragedy, really.”

The timing and level of access the hypothetical hacker appears to have gained, draining money from various parts of the company, has led Coppola and other analysts to theorize that it could be an inside job.

FTX said Saturday that it is moving as many digital assets as can be identified to a new “cold wallet custodian,” essentially a way of storing assets offline without permission. remote control.

“It looks like liquidators didn’t act fast enough to stop some kind of withdrawal from FTX after it filed for bankruptcy, and that sucks, but it just shows this,” Coppola said. how complicated,” said Coppola.

Initially, some hoped that perhaps all the missing funds were due to liquidators or bankruptcy managers trying to move assets to a safer place. But it would be unusual for that to happen on Friday night, said Molly White, a cryptocurrency researcher and collaborator at the Library Innovation Lab at Harvard University.

“It looks very different from what a liquidator might do if they were trying to secure money,” she said.

White also said there are indications that there may be insider involvement. “It seems like someone other than an insider could do such a big hack with so much access to the FTX system.”

The collapse of FTX highlights the need for cryptocurrencies to be more regulated like traditional finance, Coppola said.

“Cyrpto is not in its early stages anymore,” she said. “We have ordinary people putting their life savings into it.”

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