US Department of Justice Investigating Massive FTX Hack: Report

The US Department of Justice is investigating hundreds of millions of dollars in cryptocurrency taken in unauthorized transactions from collapsed exchange FTX, according to a report on Tuesday.

FTX was hit by a mysterious attack Nov. 11, shortly after it filed for Chapter 11 bankruptcy, adding a surprising twist to the saga surrounding the exchange and its outspoken founder, Sam Bankman-Fried (SBF). The funds were then moved around to other exchanges and converted into different cryptocurrencies.

Now, federal prosecutors are tracking the assets — and have managed to freeze some, Bloomberg first reported Tuesday, citing a person familiar with the matter. However, the amount of frozen funds is described as a “fraction” of the total amount.

Blockchain analysts claim that cryptocurrency is worth around $650 million left the Bahamas-based digital asset exchange in the hack, which did one of the biggest crypto attacks of 2022. However, FTX’s bankruptcy filing notes that “at least $372 million” was stolen, suggesting some discrepancy in the accounting of the missing funds.

Blockchain analysis firm Chainalysis confirmed to Decrypt last week that even if Bahamian authorities gained access to FTX funds after the filing, as some news reports previously claimed, hackers actually stole $650 million worth of funds at the time of the November attack.

At the collapsed exchange’s first court hearing, James Bromley – lawyer for FTX’s new management – said that a “significant amount” of the exchange’s assets are missing or have been stolen.

FB hit FTX co-founder and former CEO Bankman-Fried on eight charges earlier this month, including money laundering and fraud. The DOJ investigation is not connected to those charges, and Bankman-Fried previously suggested before her arrest that the unauthorized transactions may have been an inside job by a disgruntled employee.

FTX collapsed quickly last month after it became clear that the company did not have sufficient funds to cover its customers’ assets. This was because Alameda Research, a sister company also founded by Bankman-Fried, had the ability to use FTX client resources for its own funds and without oversight, according to newly appointed FTX CEO John J. Ray III.

Bankman-Fried was last week published to his parents’ home on a $250 million pretrial bond after being extradited to the United States from the Bahamas.