Stolen FTX funds move into Bitcoin
The FTX cryptocurrency exchange debacle continues to rock the crypto space.
Players are trying to find out where the contagion will reach next because FTX and its founder, Sam Bankman-Fried, were key players in the industry. The company filed for bankruptcy on November 11 after running out of cash to meet the demands of customers and investors.
In recent court documents, FTX said 50 of its top creditors are demanding more than $3 billion from it. The exchange owes about $1.45 billion to its top 10 creditors, according to a Nov. 19 filing with the US Bankruptcy Court for the District of Delaware.
None of the creditors were named, but the largest claim is for $226 million, followed by $203 million and $174 million. The fourth and fifth claims were for $159 million and $130 million.
Hacker(s) transfer funds
New chief executive John Ray, in charge of restructuring, has also announced the start of a strategic review of the assets, intended to wind them up.
As they waited to see which other cryptocurrency companies are affected by FTX’s collapse, on November 21, players were focused on the movement of funds stolen from FTX on the day they filed for bankruptcy.
In fact, nearly $663 million had been drained from FTX on November 11, according to blockchain security firms. The company had confirmed the theft, but never disclosed the amount.
A portion of this money had been invested in ether, the second largest cryptocurrency by market capitalization. The FTX hacker(s) had thus become among the largest holders of ether.
The funds are on the move again and are now moving into bitcoin, according to security firm Chainalysis. This means that the hacker or hackers are investing in bitcoin.
“The amount stolen from FTX is on the move, and exchanges should be on alert to freeze them if the hacker attempts to cash out,” Chainalysis warned on November 20. “Reports that the funds stolen from FTX were actually sent to the Securities Commission of the Bahamas are incorrect. Some funds were stolen, and other funds were sent to regulators.”
The firm said the hacker(s) are likely looking to cash out now that they have a mix of ether and bitcoin.
“The funds were linked from ETH to BTC, probably mixed before a withdrawal attempt. You can see this morning’s movements in Reactor,” the security firm said, showing a chart of the movements of the funds.
“We are in contact with our partners across the ecosystem as we work to secure as many assets as possible to return to depositors.”
Blockchain technology makes it possible for everyone, and more specifically crypto security firms, to see every transaction and every movement because these are recorded in some sort of large public ledger. However, it is impossible to know who is behind each transaction because the identities are replaced by series of data.
CEO Ray warned cryptocurrency exchanges that funds from the platform had been illegally transferred on November 11. Basically if they allow the person or persons or entities that stole those funds to withdraw money, they will be held accountable.
“Exchanges should be aware that certain funds transferred from FTX Global and related debtors without authorization on 11.11.22 are transferred to them through intermediary wallets,” Ray said in a statement.
He continued: “Exchanges should take all measures to ensure that these funds are returned to the bankruptcy estate.”
Tracking stolen funds from FTX and transferring them from ether to bitcoin drove down the cryptocurrency market.
Bitcoin fell 3.4% to $15,986.02 in the past 24 hours, while Ether fell 6.3% to $1,101.78, according to data from CoinGecko.
Overall, the crypto market was down 4.1% to $824 billion.
Black Friday sales
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