Bankruptcy Crypto Exchange FTX Stored Wallet Keys on AWS

FTX stored private keys for its crypto wallets on AWS, highlighting the disorganized storage of billions of dollars worth of crypto assets.

Bankrupt crypto exchange FTX allegedly stored the private keys of its crypto wallets on Amazon Web Services (AWS), according to a court document published on April 9. The document is the first interim report by current CEO John J. Ray III, sent to independent board members about control failures at the stock exchange.

Disclosures from the court archives

The report paints a damning picture of the stock market, which went down spectacularly and triggered a wave of regulatory action. The report describes the problems with the debtors as follows,

“…the debtors have had to overcome unusual obstacles due to FTX Group’s lack of appropriate record-keeping and controls in critical areas, including but not limited to management and governance, finance and accounting, as well as digital asset management, information security and cyber security. Normally … a business that handles client and investor funds, there are easily identifiable records, data sources and processes that can be used to identify and secure assets in the estate. Not so with FTX Group.

One of the report’s most important highlights is that FTX stored private keys for its crypto on AWS leased servers. It calls out the “disorganized fashion” in which assets were stored and that billions of dollars worth of crypto stored on AWS Secrets Manager was insufficiently secure.

The report calls out FTX managers for lying about the security and storage of the assets.

It stated that,

“The FTX group undoubtedly recognized how a sound crypto exchange should operate, because when asked by third parties to describe the extent to which they used cold storage, it lied.”

FTX units used QuickBooks and Excel for accounting

The report also says FTX used both QuickBooks and Microsoft Excel to manage its accounts, with several FTX units using those tools. Both QuickBooks and Excel are popular for accounting purposes.

The filing reveals that as many as 35 FTX entities used QuickBooks for general ledgers, accounting and tax returns, among other things. Excel and Google Drive were used for documents.

Transfers approved via Emojis on Slack

That transfers were approved with emojis on Slack is perhaps even more damning. FTX Group provided expenses and invoices on the Slack channel. The report describes the approval process as fleeting and informal because they approved it with an emoji.

The report also highlights that the record-keeping was inadequate and lacked thoroughness. The center used both Signal and Telegram in communication channels, with disappearing messages enabled. These revelations will not help Sam Bankman-Fried, who recently faced 12 new charges.