Updated Nov 12, 2022 - Economy

FTX targeted in $400M hack as bankruptcy unfolds

Illustration of a fingerprint with an @ symbol in the center

Illustration: Sarah Grillo/Axios

A cybercriminal appears to have attempted to steal $400 million of customer funds from the crypto exchange FTX as the platform grapples with its bankruptcy, alongside widening questions about its business practices.

Why it matters: Many consumers, companies and crypto projects have their funds trapped on the exchange while bankruptcy proceedings begin. They are anxiously waiting to see how much they will get back, and how soon.

Meanwhile, the exchange has allegedly lost a considerable amount of customer funds in loans to its sister company, Alameda Research.

  • A hack suggests there will be even less left over to distribute among customers.
  • The Block reported that $400 million worth of cryptocurrency had been stolen.

Context: Cryptocurrency holdings are all viewable on the blockchain to anyone who knows how to look, and FTX's assets are some of the most watched funds in the world right now.

  • As the irregular activity began, users began noticing immediately. FTX US general counsel Ryne Miller confirmed on Twitter that the movements of funds were not intentional.
  • One Twitter user followed the funds and detailed several ways the attacker lost funds through various trades as they attempted to cover their tracks on chain.

What they're saying: "Following the Chapter 11 bankruptcy filings - FTX US and FTX [dot] com initiated precautionary steps to move all digital assets to cold storage. Process was expedited this evening - to mitigate damage upon observing unauthorized transactions," FTX US general counsel Miller tweeted overnight.

Be smart: There are two stories right now that might be confusing: allegedly improperly used funds by FTX and Alameda, and the hack that happened over the last 24 hours. These aren't the same.

What we're watching: Experienced observers are saying the perpetrator has already been identified. If law enforcement is able to access the person (or people), that improves the chances of recovering at least some of the stolen money.

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