FTX Reports $415 Million In Crypto Assets Was Hacked

Jan. 18, 2023
FTX Reports $415 Million In Crypto Assets Was Hacked

On Tuesday, collapsed cryptocurrency exchange FTX reported to creditors that hackers stole $415 million worth of crypto from its exchange accounts. FTX’s CEO, John Ray, said that about $323m had been hacked from FTX international exchange and $90m from its US platform since the exchange filed for bankruptcy on November 11.

The company said Alameda Research’s $2 million crypto hedge fund was also stolen.

The exchange said it had identified significant shortfalls both in the U.S. and international exchanges. But did not provide an estimate of total liabilities.

Ray said in the statement

“We are making progress in our efforts to maximize recoveries, and it has taken a Herculean investigative effort from our team to uncover this preliminary information.”

FTX, valued at $32 billion last year, filed for bankruptcy protection in the U.S. on November 11. An estimated $8 billion in client assets were missing.

The founder and former CEO of crypto exchange FTX, Sam Bankman-Fried, has been accused of stealing billions of dollars from FTX customers to pay debts and expenses to his other firm, Alameda Research. In December, Bankman-Fried was arrested in the Bahamas, where he lived.

In an interview with the BBC before his arrest, he said:

I didn’t knowingly commit fraud. I don’t think I committed fraud. I didn’t want any of this to happen. I was certainly not nearly as competent as I thought I was.”

Bankman-Fried pleaded not guilty to fraud charges and was released on a $250 million bail package. His bail conditions required him to live at his parents’ home in California and wear an electronic monitoring bracelet.

FTX Recoveries

Last week, the company’s lawyer, Andy Dietrich, told a bankruptcy judge in Delaware that the exchange had recovered more than $5 billion in cash and liquid (easily sellable) crypto assets nine weeks after filing for bankruptcy.

On Tuesday, the company provided additional details saying it had recovered $3.5 billion in crypto assets and FTT tokens, $300 billion in liquid securities, and $1.7 billion in cash.

Cryptocurrencies recovered to date include $268 million in bitcoin, $529 million in FTX’s native FTT token, and $685 million in Solana based on crypto prices on November 11, 2022. FTT has lost more than 90% of its value since the beginning of November.

The Bahamas Securities Commission seized assets following the FTX bankruptcy in November. It came to light during an investigation into the FTX hacks. The revelation led to a dispute between Bahamian regulators and FTX’s US-based bankruptcy team, which ended in January.

The Bahamian government was holding $426 million for creditors, Ray said on Tuesday.

Binance, a competitor of FTX and the largest cryptocurrency exchange by volume, was an early investor in FTX. In 2021, Binance CEO Changpeng Zhao decided to sell his shares in FTX back to Sam Bankman-Fried. Instead of cash, Binance received $2.1 billion in FTT and BUSD.

FTX’s advisors are also investigating the $2.1 billion stake repurchase payment from FTX to crypto exchange Binance.

Syed Ali Haider

Researcher & Editor
Ali Haider is a Blockchain enthusiast and writer passionate about enhancing the acceptance, adoption, and integration of Blockchain technology worldwide. He has also been an advocate for digital freedom and cybersecurity for many years. He is busy analyzing the crypto market when he's not penning down his words.

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