Failed crypto exchange FTX hacked, reports say

More than $600m left users' wallets on Friday after the company filed for bankruptcy

Crisis-struck cryptocurrency platform FTX has gone bankrupt in the US and its chief executive Sam Bankman-Fried has resigned. AFP
Beta V.1.0 - Powered by automated translation

Cryptocurrency exchange FTX said in its official Telegram channel that it had been hacked and instructed users not to install any new upgrades and to delete all FTX apps, according to a report by Coindesk.

FTX and FTX US’s wallets appear to be hacked, with more than $600 million leaving the exchange late on Friday, the report said.

“FTX has been hacked. FTX apps are malware. Delete them. Chat is open. Don’t go on FTX site as it might download Trojans,” wrote an account administrator in the FTX support Telegram chat. The message was pinned by FTX general counsel Ryne Miller.

Mr Miller also tweeted on Saturday that the exchange was investigating abnormalities with wallet movements related to consolidation of FTX balances across exchanges.

“Investigating abnormalities with wallet movements related to consolidation of FTX balances across exchanges — unclear facts as other movements not clear. Will share more info as soon as we have it,” the tweet read.

Mr Miller said on Twitter that FTX is expediting the process of moving digital assets into cold storage — which is unconnected to the internet — “to mitigate damage upon observing unauthorised transactions”.

According to on-chain data, various Ethereum tokens, as well as Solana and Binance Smart Chain tokens have exited FTX’s official wallets and moved to decentralised exchanges like 1inch, the Coindesk report said.

Both FTX and FTX US appear to be affected, it added.

The transfers come on the same day that the Bahamas-based FTX commenced bankruptcy proceedings in the US following its collapse this week.

Many FTX wallet holders are also reporting that they are seeing $0 balances in their FTX.com and FTX US wallets, Coindesk reported.

FTX’s API appears to be down, which could account for this, the report said.

“By midnight eastern time, FTX’s login portal was unavailable [the site is still online], giving users a 503 error when they attempted to log in,” Coindesk said.

“A 503 error happens when the server is unavailable, commonly because it’s down for maintenance or unavailable for access.”

FTX chief executive Sam Bankman-Fried has resigned from his position, the company said on Friday in a statement posted on its Twitter page.

A rescue deal with rival exchange Binance fell through, precipitating crypto’s highest-profile collapse in recent years.

“FTX Trading Ltd, West Realm Shires Services, Alameda Research and approximately 130 additional affiliated companies have commenced voluntary proceedings under Chapter 11 of the United States Bankruptcy Code in the District of Delaware,” the statement said.

The company will begin "an orderly process to review and monetise assets for the benefit of all global stakeholders", it said.

John J Ray III has been appointed chief executive of the FTX Group, the company said, adding that Mr Bankman-Fried will remain to “assist in an orderly transition”.

“The immediate relief of Chapter 11 is appropriate to provide the FTX Group the opportunity to assess its situation and develop a process to maximise recoveries for stakeholders,” Mr Ray said.

Meanwhile, Reuters reported that at least $1 billion of customer funds have vanished from FTX, citing sources.

Mr Bankman-Fried secretly transferred $10bn of customer funds from FTX to his trading company Alameda Research, the sources told Reuters.

A large portion of that total has since disappeared, they said. One source put the missing amount at about $1.7bn. The other said the gap was between $1bn and $2bn.

The financial hole was revealed in records that Mr Bankman-Fried shared with other senior executives last Sunday, according to the two sources.

In a tweet on Friday, Mr Bankman-Fried said he was "piecing together" what had happened at FTX.

"I was shocked to see things unravel the way they did earlier this week," he wrote. "I will, soon, write up a more complete post on the play by play."

Samuel Bankman-Fried, founder and chief executive of FTX, secretly transferred $10 billion of customer funds from the crypto exchange to his trading company Alameda Research, Reuters reported. AFP
Updated: November 12, 2022, 8:45 AM
EDITOR'S PICKS
NEWSLETTERS
MORE FROM THE NATIONAL