FTX says hackers stole $415m from its platform

The cryptocurrency exchange has identified about $5.5 billion of liquid assets to date

Former FTX chief executive Sam Bankman-Fried faces fraud charges over the collapse of the cryptocurrency exchange he founded. Reuters
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Collapsed cryptocurrency exchange FTX has lost about $415 million in cryptocurrency after the platform was hacked, the company said in a report to creditors on Tuesday.

The money — comprising about $323 million in cryptocurrency from FTX's international exchange, another $90 million from its US exchange and $2 million from Alameda Research’s digital assets — was stolen in a series of “unauthorised third-party transfers”, it said.

FTX identified about $5.5 billion worth of liquid assets to date, including $1.7 billion in cash, $3.5 billion in digital assets and more than $300 million in securities, it said in the report.

However, FTX Debtors group, which comprises FTX Trading and its affiliated debtors, said there was a substantial shortfall of digital assets at the FTX.com and FTX US exchanges, based on current estimates of the amount of digital assets associated with both exchanges as of the petition date.

“We are making important progress in our efforts to maximise recoveries, and it has taken a Herculean investigative effort from our team to uncover this preliminary information,” said John Ray, chief executive and chief restructuring officer of FTX Debtors.

FTX filed for Chapter 11 bankruptcy protection in the US on November 11 after traders withdrew $6 billion from the platform in three days and rival exchange Binance backed out of a rescue deal.

The platform's co-founder and former chief executive Sam Bankman-Fried is accused of stealing billions of dollars in FTX customer deposits to support his Alameda Research hedge fund.

The funds were used to buy property and to make political contributions in what prosecutors have called a fraud of epic proportions.

Mr Bankman-Fried, who was arrested in the Bahamas last month, later said he had only $100,000 in his bank account.

Since his release on a $250 million bond on December 22, he is under house arrest and is required to live with his parents, both professors at Stanford Law School in California.

Earlier this month, he pleaded not guilty to the eight criminal charges, including conspiracy and wire fraud.

On Tuesday, Mr Bankman-Fried said that the company's lawyers at Sullivan & Cromwell had presented an “extremely misleading” picture of the company's finances.

“Some of what S&C released is extremely misleading. In particular, they write: 'The assets identified as of the petition date are substantially less than the aggregate third-party customer balances suggested by the electronic ledger for FTX US'. And in a presentation, they said 'Investigation has confirmed shortfalls at both international and US exchanges',” he wrote in a blog post.

“These claims by S&C are wrong, and contradicted by data later on in the same document. FTX US was and is solvent, likely with hundreds of millions of dollars in excess of customer balances.”

Mr Bankman-Fried’s trial has been set for October 2.

Updated: January 18, 2023, 8:08 AM