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FTX Hit by Nine-Figure Hack as Meltdown Continues

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One of the biggest dramas in cryptocurrency history continues. Over $400 million was drained from the bankrupt crypto exchange early Saturday.

FTX Hit by Nine-Figure Hack as Meltdown Continues
Photo: Anthony Kwan/The Wall Street Journal

Key Takeaways

  • FTX has been hacked.
  • Over $400 million was drained from the cryptocurrency exchange early Saturday. Employees have moved remaining assets to cold storage.
  • Some have suggested that the incident may be an inside job due to the ongoing FTX meltdown.

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FTX.US General Counsel Ryne Miller said that assets had been moved to cold storage “to mitigate damage upon observing unauthorized transactions.” 

FTX Suffers Major Hack 

FTX, the collapsed cryptocurrency exchange that’s been at the center of a rapidly developing drama this week, has been hacked. 

Hours after the embattled firm announced it was filing for Chapter 11 bankruptcy, a number of on-chain sleuths took to Twitter to point out a series of suspicious outflows from the exchange to external wallets. Though the full scale of the damage is still unknown, over $400 million was moved to addresses on Ethereum, Solana, BNB Chain, and other crypto networks. “FTX has been hacked. All funds seem to be gone,” an admin going by Rey wrote on the exchange’s official Telegram channel. According to the admin, FTX’s app was also affected. “FTX apps are malware. Delete them,” they wrote. 

FTX.US General Counsel Ryne Miller addressed the incident on Twitter early Saturday, saying that some of the company’s remaining employees were “investigating abnormalities with wallet movements.” He later followed up by confirming that team members had moved assets on FTX and FTX.US to cold storage “to mitigate damage upon observing unauthorized transactions.” 

https://twitter.com/_Ryne_Miller/status/1591326796305530880?s=20&t=PKh_jJboOzv7bdwY1LKrhw

Due to the nature of the hack, which saw the attackers gain free access to multiple areas of the exchange to drain hundreds of millions of dollars across different crypto networks, some have speculated that the incident may have been an inside job. “Multiple former FTX employees confirmed to me they do not recognize these transfers,” on-chain detective ZachXBT tweeted. 

Shortly after the hack, Tether froze $31.4 million worth of USDT transferred in the incident. Elon Musk also weighed in, noting that the hack was “being tracked in real-time on Twitter.” Binance CEO Changpeng “CZ” Zhao, who helped start a bank run on FTX last week by announcing his plans to dump a large allocation of FTX’s FTT coin, also posted a tweet that appeared to allude to the incident, taking the opportunity to take a shot at former FTX CEO Sam Bankman-Fried. “What a sh!t show… And it’s going to be crypto’s fault, (instead of one guy’s fault)…” he tweeted. 

The hack news follows a week of chaos in the crypto market brought on by FTX’s collapse. This week, it emerged that the exchange was insolvent after former CEO Sam Bankman-Fried used billions of dollars worth of customer funds to bail out his trading firm, Alamada Research. The firm filed for bankruptcy Friday while Bankman-Fried stepped down. Alameda is also winding down. The FTX situation is still developing at a fast pace, and U.S. agencies like the Department of Justice and Securities and Exchange Commission are investigating the events. 

Disclosure: At the time of writing, the author of this piece owned ETH, USDT, and several other crypto assets. 

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