FTX says $415 million worth of cryptocurrency was hacked

The FTX logo displayed on a phone screen is seen through broken glass in this photo illustration taken in Krakow, Poland, on November 14, 2022.

Jakub Porzycki/NurPhoto via Getty Images

Bankrupt crypto firm FTX said on Tuesday that $415 million worth of cryptocurrency was hacked from the exchange’s accounts, representing a significant portion of the identified assets the company is trying to recover.

In a presentation titled “Maximizing FTX’s Recovery,” attorneys and counsel for FTX’s debtors updated the total liquid assets identified for recovery and said they were estimated at about $5.5 billion.

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However, this includes “unauthorized third-party transfers” of $323 million from FTX.com (international business) and $90 million from FTX US, the company said in a statement. Another $2 million in cryptocurrency from hedge fund Alameda Research was also stolen. The missing crypto could be linked to a hack of FTX’s systems that was discovered shortly after the company collapsed in November.

At the time, the stolen cryptocurrency was valued at $477 million, according to blockchain analytics firm Elliptic.

FTX filed for bankruptcy after a wave of withdrawals crippled the exchange and sister hedge fund Alameda. Founder and former CEO Sam Bankman-Fried was indicted by federal prosecutors in December on fraud and money laundering charges. Bankman-Fried pleaded not guilty to the charges in January and was released on $250 million bail ahead of a trial scheduled for October.

FTX’s advisors are also reviewing FTX’s $2.1 billion share buyback payment to crypto exchange Binance in the third quarter of 2021. Binance was the first outside investor in FTX, but Bankman-Fried bought out Binance’s stake in his company in 2021 . years.

In an appearance on CNBC in December, Binance CEO Changpeng “CZ” Zhao was asked about the potential return of $2.1 billion as part of FTX’s bankruptcy proceedings.

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“I think we’ll leave it to the lawyers,” Zhao said when asked if he was willing to return the money. “I think our legal team is perfectly capable of handling this.”

A 20-page presentation by FTX’s lawyers and advisers breaks down FTX’s assets and where they are looking for potential recoveries that could be returned to debtors. That includes hundreds of millions of dollars worth of property in the Bahamas, where Bankman-Fried lived and ran the company.

“We are making important progress in our efforts to maximize recovery, and it took a significant investigative effort for our team to uncover this preliminary information,” John Ray, who served as FTX’s CEO during the restructuring, said in a statement Tuesday.

Despite separating liquid from illiquid tokens, the presentation included $529 million worth of FTX’s self-issued tokens, FTT, under the exchange’s “liquid” assets. FTT has lost over 90% of its value since the beginning of November.

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