Mere hours after filing for Chapter 11 bankruptcy protection, FTX’s fraught situation worsened dramatically. On late Friday night, the crypto exchange claimed it had been hacked after millions of dollars in digital assets were siphoned from FTX wallets despite the company freezing withdrawals earlier in the day. The exact amount of missing money is unclear, but CoinDesk puts the figure at more than $600 million.
“FTX has been hacked. FTX apps are malware.” the company posted on its official Telegram account. It urged customers to avoid the FTX website and delete its apps from their phones. Following the announcement, FTX General Counsel Ryne Miller said the company was moving all of its digital assets offline “to mitigate damage upon observing unauthorized transactions.”
Following the Chapter 11 bankruptcy filings – FTX US and FTX [dot] com initiated precautionary steps to move all digital assets to cold storage. Process was expedited this evening – to mitigate damage upon observing unauthorized transactions.
— Ryne Miller (@_Ryne_Miller) November 12, 2022
As CoinDesk points out, some crypto community members have speculated the funds may have been withdrawn by someone from FTX founder Sam Bankman-Fried’s inner circle. Bankman-Fried hasn’t commented on the incident. The missing millions are in addition to at least $1 billion worth of customer funds that vanished from FTX before the company filed for bankruptcy. According to Reuters, Bankman-Fried “secretly transferred” $10 billion from the crypto exchange to his trading company Alameda Research. He reportedly disclosed the financial gap to other FTX executives on November 6th, mere days before Binance announced and subsequently abandoned its bid to rescue the firm.
“We didn’t secretly transfer,” he told Reuters. “We had confusing internal labeling and misread it.” When asked about the missing funds, he reportedly replied “???” On Saturday, Bankman-Fred also denied reports he had flown to Argentina after he resigned as CEO of FTX.