The new CEO of troubled cryptocurrency platform FTX.com on Saturday said the company was making “every effort to secure all assets” following unauthorized transactions potentially worth millions of US dollars.
“Unauthorized access to certain assets has occurred,” FTX CEO John Ray said in a statement posted to Twitter by the company’s general counsel, Ryne Miller.
FTX officials did not detail the quantity of unauthorized transactions made, but cryptocurrency analysis firm Elliptic Ltd said in a report published on Saturday that “US$477 million is suspected to have been stolen.”
Photo: AFP
More than “US$663 million in various tokens” had been drained from FTX’s wallets only 24 hours after it filed for bankruptcy,” Elliptic said, with the difference “believed to have been moved into secure storage by FTX themselves.”
FTX US and FTX.com “continue to make every effort to secure all assets, wherever located,” said Ray, who specializes in corporate turnarounds.
A debate formed on social media about whether the exchange was hacked or a company insider had stolen funds, a possibility that cryptocurrency analysts could not rule out.
The announcement comes a day after FTX filed for bankruptcy, part of a stunning collapse that has reverberated through the relatively young sector, sending other cryptocurrencies plummeting and drawing scrutiny from government regulators.
The company had valued its assets between US$10 billion and US$50 billion, and listed more than 130 affiliated companies around the world tied to FTX.com, FTX US and trading firm Alameda Research Ltd, according to its bankruptcy filing.
Additionally, 30-year-old Sam Bankman-Fried, once considered a star in the freewheeling cryptocurrency world, resigned on Friday as the platform’s CEO. He was interviewed by Bahamian police and regulators on Saturday, a person familiar with the matter said.
As recently as 10 days ago, FTX was considered the world’s second-largest cryptocurrency platform, at one point valued at US$32 billion, but the company is now left trying to reassure a skeptical public.
“We are in the process of removing trading and withdrawal functionality and moving as many digital assets as can be identified to a new cold wallet custodian,” Ray said in the statement.
“Cold storage” refers to moving cryptocurrency assets to a hardware “wallet” unconnected to the Internet to assure its security.
“An active fact review and mitigation exercise was initiated immediately in response” to the unauthorized transactions, Ray said.
Miller wrote on Twitter about an investigation into anomalies and other unclear movements, and by Saturday morning indicated that “unauthorized transactions” had occurred.
Politicians and regulators are calling for stricter oversight of the unwieldy industry. Experts say the saga is still unfolding.
“We’ll have to wait and see what the fallout is, but I think we are going to see more dominoes falling and an awful lot of people stand to lose their money and their savings,” said Frances Coppola, an independent financial and economic commentator. “That is just tragic, really.”
The timing and the extent of access that the assumed hacker appeared to achieve, siphoning money from multiple parts of the company, led Coppola and other analysts to theorize that it could have been an inside job.
The collapse of FTX highlights the need for cryptocurrency to be regulated more like traditional finance, Coppola said.
“Cyrpto isn’t in the very early stages anymore,” she said. “We’ve got ordinary people putting their life savings into it.”
Additional reporting by AP and Bloomberg
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