Struggling cryptocurrency exchange FTX said on Saturday it was moving funds to offline storage after reporting “unauthorized transactions.”
Analysts said millions of dollars in assets have been pulled from the platform.
“Following Chapter 11 Bankruptcy Filings – FTX US and FTX [dot] com has taken precautionary measures to move all digital assets to cold storage. The process was expedited tonight – to mitigate damages by observing unauthorized transactions,” tweeted FTX US General Counsel Ryne Miller.
Cold storage refers to crypto wallets that are not connected to the internet to protect against hackers.
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Miller previously wrote that FTX was “investigating anomalies with portfolio movements related to the consolidation of FTX balances on exchanges”, while noting that the facts were unclear “because other movements [were] not clear.”
An administrator of the official FTX Telegram channel wrote that “Ftx has been hacked”.
This administrator told users not to visit the FTX site “because it may download Trojans”.
“Some funds have been recovered,” the FTX admin wrote.
Coindesk reports that the post was pinned by Miller.
FTX did not immediately return FOX Business’ request for comment on the matter.
Figures from Singapore-based analytics firm Nansen showed a net outflow of around $266 million from FTX, with $73 million withdrawn from FTX US
Reuters, citing two people familiar with the matter, reported that at least $1 billion in client funds had gone missing and people had told the outlet that Bankman-Fried secretly transferred $10 billion in client funds from FTX to its commercial company Alameda Research.
Two sources told Reuters that Bankman-Fried – in a meeting he confirmed took place – shared documents with other senior executives that exposed the financial hole.
Spreadsheets reportedly showed that between $1 billion and $2 billion of the funds were not counted among Alameda’s assets, and the spreadsheets did not show where the money had been transferred.
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In text messages to Reuters, Bankman-Fried said he “disagrees with the characterization” of the $10 billion transfer.
“We didn’t transfer secretly,” he said. “We had confusing internal labeling and we misread it.”
Asked about the missing funds, Bankman-Fried replied: “???”
After further review, FTX’s legal and finance teams reportedly learned that Bankman-Fried had implemented what two people described as a “backdoor” into FTX’s accounting system, allowing it to execute orders for change company financial records without alerting others.
Bankman-Fried denied setting up a “backdoor”.
FOX Business’ request for additional comment from Bankman-Fried was not immediately returned.
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This all comes after Bahamas-based FTX filed for Chapter 11 bankruptcy protection.
A bailout deal with rival exchange Binance fell through.
Reuters said the U.S. Securities and Exchange Commission and Department of Justice are investigating FTX.com’s handling of customer funds, as well as its crypto lending activities.
Reuters contributed to this report.
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