FTX says $415 million in cryptocurrency was hacked

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

Jakub Porzycki/NurPhoto via Getty Images

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

In a presentation titled “Maximizing FTX Recoveries,” attorneys and advisors for FTX debtors updated the total liquid assets identified for recovery, and said they were worth an estimated $5.5 billion.

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. It added that the Alameda Research hedge fund’s cryptocurrency, worth $2 million, was also stolen. The missing cryptocurrency could be linked to the FTX systems hack that was revealed shortly after the company’s collapse in November.

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

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

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FTX Advisors is also reviewing FTX’s $2.1 billion share repurchase payments to cryptocurrency exchange Binance in the third quarter of 2021. Binance was the first outside investor in FTX, but Bankman-Fried bought Binance’s stake in his company in 2021.

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

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

A 20-page presentation from FTX attorneys and advisors provides a breakdown of FTX’s assets and where they look for potential recoveries that can be returned to debtors. That includes hundreds of millions of dollars worth of property in the Bahamas, where Bankman Fried used to live and run the company.

“We are making important progress in our efforts to maximize recovery, and it took tremendous investigative efforts from our team to uncover this initial information,” John Ray, who serves as CEO at FTX during the restructuring, said in a statement Tuesday.

Although liquid tokens were separated from non-liquid tokens, the offering included $529 million worth of FTX’s self-issued token, FTT, within the “liquid” assets of the exchange. FTT has lost more than 90% of its value since early November.

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