Bankruptcy Declared FTX's "87 Billion Won Disappearance Mystery"... "Possible Hacking"

by Jo Youjin

Published 13 Nov.2022 06:11(KST)

[Asia Economy Reporter Yujin Cho] Approximately 870 billion KRW worth of cryptocurrency has disappeared from the cryptocurrency exchange FTX, which filed for bankruptcy protection due to a liquidity crisis, prompting the company to investigate the possibility of a hacking incident.

Bankruptcy Declared FTX's "87 Billion Won Disappearance Mystery"... "Possible Hacking"

According to Bloomberg and other sources on the 12th (local time), blockchain analysis firm Nansen analyzed that $662 million (about 873.2 billion KRW) worth of digital tokens were leaked through unauthorized transactions within the last 24 hours on FTX's coin trading platforms, FTX International and FTX US.

Another blockchain analysis company, Elliptic, confirmed on the morning of the same day that approximately $475 million (about 626.5 billion KRW) worth of crypto assets were withdrawn from FTX under 'suspicious circumstances.' Tom Robinson, co-founder of Elliptic, stated that the missing crypto assets were immediately converted into Ethereum, the second-largest cryptocurrency, after leaving FTX.

The Wall Street Journal (WSJ) reported that decentralized finance platforms like Ethereum are popular among hackers who want to automatically process transactions to avoid asset seizure.

On the same day, a post mentioning "FTX has been hacked" was uploaded on FTX's official Telegram channel, increasing concerns about the possibility of hacking.

The fund outflow, which raises the possibility of hacking, occurred shortly after FTX filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in Delaware the day before.

FTX legal counsel Ryan Miller stated on Twitter that they are investigating "abnormal movements" related to the consolidation of FTX account balances and described the fund outflow as "unauthorized transactions."

Miller explained that they have begun transferring all digital assets to 'cold storage,' a crypto wallet not connected to the internet, to securely store them. Additionally, the company has notified customers to delete the FTX app and avoid visiting the homepage.

Bloomberg reported that Sam Bankman-Fried, the founder of FTX who is suspected of fleeing to Argentina, responded that he is currently staying in the Bahamas, where FTX headquarters are located.

Former CEO Bankman-Fried posted on Twitter after FTX filed for bankruptcy, bowing his head and saying, "I am truly sorry once again that we ended up like this."

FTX, once considered one of the world's top three cryptocurrency exchanges, experienced a bank run after allegations of financial instability at its affiliate Alameda surfaced. Facing a liquidity crisis, FTX sought to be acquired by Binance, the world's largest cryptocurrency exchange, as a self-help measure, but the deal fell through, leading to the bankruptcy protection filing.