A new report from Wired claims that cryptocurrency exchange FTX’s “weak security mechanisms” and opaque business practices could have led to even greater losses. They are potentially in the billions of US dollars (USD).
According to the data, the platform’s managers tried to move various assets worth more than $1 billion to hardware storage devices, as digital funds on the exchange regularly disappeared. Ultimately, they managed to save most of the users’ cryptocurrencies. However, this means that almost the entire total balance of the exchange was at risk.
Accounts linked to FTX and FTX.US “were emptied” on November 11, 2022. This happened just hours after the company declared bankruptcy. Its founder Sam Bankman-Fried said he was stepping down as CEO. FTX Debtors chief restructuring officer John J. Ray III later said that $323 million in various tokens was stolen from the accounts of the global platform. Another $90 million disappeared from the vaults of the American version.
According to the report, most of the FTX funds were stored in hot wallets. The attackers likely gained access to private keys and began withdrawing digital funds. According to Wired, after the bankruptcy, few team members knew the exact number of wallets owned by the platform or the location of private keys.
The exchange team watched as accounts were emptied before FTX co-founder Gary Wang gained access to the wallets and began withdrawing cryptocurrencies to safety. He transferred about $500 million to FTX advisor from the law firm Alvarez & Marsall, Kumanan Ramanathan. After the transaction to this address, “the flow of funds from FTX stopped.” The next day, Wang and Bankman-Fried executed several tranches of $500 million into wallets provided by BitGo. This helped the company save more than $1 billion.