Bankrupt FTX Hit by Mysterious Outflow of Around $662M as Crypto Industry Goes Ahead

Sam Bankman-Fried’s bankrupt digital asset exchange FTX has been hit by a mysterious outflow of around $662 million in tokens over the past 24 hours, the latest twist in one of the darkest periods for the crypto industry.

Customers still coming to terms with the platform’s plunge Friday into Chapter 11 proceedings were then faced with what the general counsel of its US arm, Ryne Miller, described as “wallet movement anomalies”.

Miller reported on Twitter that FTX had begun moving digital assets into cold storage — wallets not connected to the Internet — after filing for bankruptcy on Friday. The process was later accelerated “to mitigate the damage of observing unauthorized transactions.”

Blockchain analytics firm Nansen, which gave the total estimate of $662 million in withdrawals, said the coins were leaked from both FTX’s international exchanges and US exchanges. A separate analysis by Elliptic said initial indications were that nearly $475 million had been stolen from the exchange in illegal transactions, with the stablecoins and other tokens taken being quickly converted into Ether on decentralized exchanges — “a common technique used by hackers to avoid confiscation.”

Paolo Ardoino, chief technology officer at stablecoin issuer Tether, was quoted in a tweet suggesting that he had blacklisted more than $30 million of the “FTX attacker’s” holdings in his USDT token.

“It is not clear who exactly is doing the transactions, but one would not expect to see these transactions on-chain right now,” said Alex Svanevik, CEO of Nansen.

The latest developments are yet another blow to the cryptocurrency sector, which is reeling from a year-long disaster as well as the collapse of the stock exchange and sister trading house Bankman-Fried Alameda Research. If the leaks 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 owned by FTX was drained of its entire balance in FTT during the event, according to Nansen. FTT coins are native to the stock market. Nansen said total outflows from FTX eventually stopped.

FTX’s fall into bankruptcy capped the fall of one of crypto’s richest tycoons. The US Securities and Exchange Commission is investigating how closely intertwined its businesses were and whether FTX mishandled client funds.

Twitter was abuzz with protests from apparently aggrieved customers. They reported a community chat on Telegram warning that FTX had been hacked and that some customer accounts had been depleted. The claims could not be immediately verified, and multiple calls to FTX officials outside normal US business hours went unanswered.

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