November 15, 2022
Embattled cryptocurrency exchange FTX announced on Saturday, November12, that it would move funds into offline storage after reporting “unauthorized transactions.” Analysts said millions of dollars’ worth of assets—$1 billion or more—had been withdrawn from the platform, reports Fox Business.
Indeed, according to Fox, a full-fledged liquidity crisis forced FTX to file for bankruptcy on Friday, November 11.
Two sources told Reuters that FTX CEO Sam Bankman-Fried—in a meeting he confirmed took place—shared records with other senior executives that revealed the financial hole. Spreadsheets reportedly showed that between $1 and $2 billion dollars of the funds were not accounted for among Alameda’s assets and that the spreadsheets did not indicate where the money had been moved.
Reuters, citing two people familiar with the matter, reported that at least $1 billion of customer funds had disappeared and that people told the news outlet that Bankman-Fried transferred millions of customer funds from FTX to his trading company Alameda Research.
Further, CNBC reports, the quant trading firm Sam Bankman-Fried founded was able to quietly use customer funds from his exchange FTX in a way that flew under the radar of investors, employees, and auditors in the process. The way they did it was by using billions from FTX users without their knowledge, says the source.
Today, Bankman-Fried’s wealth, which was estimated to be $15.6 billion earlier in the month, also has disappeared, according to the Bloomberg Billionaires Index. The index currently estimates Bankman-Fried has no material wealth.
“Following the Chapter 11 bankruptcy filings—FTX US and FTX [dot] com initiated precautionary steps to move all digital assets to cold storage. Process was expedited this evening—to mitigate damage upon observing unauthorized transactions,” FTX U.S. General Counsel Ryne Miller tweeted.
Cold storage refers to crypto wallets that are not connected to the Internet to guard against hackers.
Miller had previously written that FTX was “investigating abnormalities with wallet movements related to consolidation of FTX balances across exchanges,” although noting that facts were unclear “as other movements [were] not clear.”
That administrator told users not to visit the FTX site “as it might download Trojans,” adding, “Some funds were retrieved.”
FTX did not immediately return Fox Business’ request for comment on the matter.
Research contact: @FoxBusiness