Bankrupt FTX hit by mysterious outflow of over $900m in tokens in 24 hours

FTX officials confirmed rumours of a hack and have instructed customers to delete FTX apps and avoid its website. PHOTO: AFP

NEW YORK – Mr Sam Bankman-Fried’s bankrupt digital asset exchange FTX was hit by a mysterious outflow of about US$662 million (S$908.5 million) in tokens over a span of 24 hours, the latest twist in one of the darkest periods for the crypto industry.

This comes as FTX officials appeared to confirm rumours of a hack on the bankrupt crypto exchange’s Telegram channel and have instructed customers to delete FTX apps and avoid its website, according to news outlet CoinDesk.

Customers still coming to terms with the platform’s Friday plunge into Chapter 11 proceedings were subsequently confronted with what the general counsel of its US arm, Mr Ryne Miller, described as “abnormalities with wallet movements”.

Mr Miller said on Twitter that FTX is expediting the process of moving digital assets into cold storage – which is unconnected to the Internet – “to mitigate damage upon observing unauthorised transactions”.

Blockchain analytics firm Nansen believes that the coins flowed out of both FTX’s international and United States exchanges.

Mr Paolo Ardoino, chief technology officer at stablecoin issuer Tether, referenced a tweet suggesting that more than US$30 million of the “FTX attacker’s” holdings in the token has been blacklisted.

“It is unclear exactly who is making the transactions, but you would not expect to see these on-chain trades at this time,” said Mr Alex Svanevik, chief executive at Nansen.

The latest developments are another blow for the crypto sector, which is reeling from a year-long rout, as well as the implosion of Mr Bankman-Fried’s exchange and sister trading house Alameda Research.

If the outflows are a security exploit, they would add to what is shaping up to be a record year for attacks on the digital token industry.

The main wallet belonging to FTX was drained of its entire balance in FTT during the incident, according to Nansen. The FTT coins are native to the exchange. Nansen said the overall outflows from FTX eventually ceased.

FTX’s descent into bankruptcy capped the downfall of one of crypto’s wealthiest moguls. The US Securities and Exchange Commission is investigating how closely intertwined Mr Bankman-Fried’s businesses were and whether FTX mishandled customer funds.

Twitter was rife with protests apparently from aggrieved clients. They cited a community Telegram chat warning, as reported by CoinBase, that FTX had been compromised, and that some client accounts were drained.

FTX, Alameda and about 130 of its other companies filed for bankruptcy court protection from creditors in Delaware.

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