Crypto disaster worsens as Exchange sees mysterious outflows exceeding $600 million
The collapse of FTX, already one of the most spectacular disasters in financial history, worsened as hundreds of millions of dollars were drained from the cryptocurrency exchange hours after it filed for bankruptcy.
More than $600 million was withdrawn from FTX’s crypto wallets late Friday. Soon after, FTX stated in its official Telegram channel that it had been compromised, and instructed users not to install any new upgrades and to delete all FTX apps.
“FTX has been hacked. FTX apps are malware. Delete them. Chat is open. Do not go to FTX website as it may download trojans,” an account admin wrote in the FTX Support Telegram chat. The message was pinned by FTX General Counsel Ryne Miller.
Hours later, Miller revealed in a tweet that FTX US and FTX.com had moved all of their digital assets into cold storage due to Friday’s bankruptcy. “The process was sped up this evening – to reduce damage by observing unauthorized transactions,” he said.
Many FTX wallet holders reported $0 balance in their FTX.com and FTX US wallets. FTX’s API seemed to be down, which might explain this. According to on-chain data, various Ethereum tokens as well as Solana and Binance Smart Chain tokens left FTX’s official wallets and moved to decentralized exchanges such as 1inch. Both FTX and FTX US appear to be affected.
The transfers came on the same day the firm filed for Chapter 11 bankruptcy protection in the United States after apparently losing — or forfeiting — billions of dollars in user funds. Suspicions — which are conjecture at this point — circulated online as to whether, rather than an external attack, someone within the company might have been responsible.
On Twitter, members of the cryptocurrency community quickly began to speculate that the outflows could have been coordinated by a member of Bankman-Fried’s inner circle, and pointed out that the simultaneous and sophisticated hacks of FTX and FTX US are indicative of a potential inside job. Twitter scout ZachXBT tweeted Friday evening that “several former FTX employees confirmed to me that they do not recognize these transfers.”
Around midnight Eastern time, FTX’s login portal was unavailable (although the website was still online) and gave users a 503 error when trying to login. A 503 error occurs when the server is unavailable, often because it is down for maintenance or unavailable for access.
UPDATE (November 12, 2022, 06:00 UTC): Adding updates and details throughout.
UPDATE (Nov. 12, 2022, 2:21 p.m UTC): Hours after this article was published, FTX said it had accelerated the move of its remaining funds to cold wallets. Click here for more.
UPDATE (12 November 2022, 15:25 UTC): Adds context in first paragraph and revisions throughout.