FTX’s drop continues to do damage. The now-bankrupt cryptocurrency exchange is plagued by unauthorized asset transactions that could result in the disappearance of hundreds of millions of dollars. A situation that forced the new boss of the group to communicate.
“FTX US and FTX. com continue to make every effort to secure all assets, wherever located”thus tried to reassure John Ray, new CEO and responsible for the restructuring of the group, in a message posted on Saturday, November 12 on Twitter by Ryne Millerlegal officer of FTX. “Unauthorized access to certain assets has occurred” thus confirmed John Ray.
This replaced Friday at the head of FTX Sam Bankman-Fried, its founder, who had just resigned. The cryptocurrency exchange platform, a very little regulated sector, had the same day placed under the protection of Chapter 11 of the American bankruptcy law. The company had valued its assets at between $10 billion and $50 billion (€9 billion to €48 billion) and listed more than 130 affiliates worldwide, according to its bankruptcy filing.
Assets placed on a wallet not connected to the Internet
FTX officials did not provide details on the amount of transactions observed in the illicit movements in question, but the cryptocurrency analysis firm Elliptic specifies, in an analysis published on Saturday, that “just 24 hours after filing for bankruptcy (…), FTX wallets have been emptied of more than 663 million dollars”. In details, “$477 million was allegedly stolen, while the rest was transferred to secure storage by FTX itself”says Elliptic.
“Among other things, we are in the process of removing trading and withdrawal functionality and transferring as many digital assets as possible to a new cold wallet custodian” – a wallet not connected to the Internet intended to store cryptocurrency without an external takeover being possible – thus detailed the new boss of FTX in the statement published on Twitter. John Ray also clarified that“an active examination of the facts (…) was launched immediately in response. We have been in contact and are coordinating with relevant law enforcement and regulators”.
FTX, which was still considered the second largest cryptocurrency platform in the world ten days ago and was valued at some $32 billion, suffered a lightning rout.
Friday marked a turning point after a hectic week. The group’s founder, Sam Bankman-Fried, 30, considered to be at the origin of one of the most influential successes in the cryptocurrency universe and so far a multi-billionaire, has resigned and been replaced in the process by John Ray.
“Unclear facts”
Then, overnight, FTX’s chief legal officer, Ryne Miller, tweeted about a “investigating anomalies with portfolio movements related to the consolidation of FTX balances between exchanges”and had mentioned “facts unclear as other movements are unclear”. He then, on Saturday morning, indicated that “unauthorized transactions” had been observed, and that the platform “took precautionary measures to move all digital assets to cold storage”. “The process has been accelerated [vendredi] evening – to mitigate damage when observing unauthorized transactions”he specified.
The disappointment came to light when news reports revealed that his Alameda Research fund was investing in cryptoassets issued by FTX. com in a risky financial arrangement that risks revealing major conflicts of interest. FTX’s troubles have also been accentuated by the number one in the sector, Binance, which announced that it was selling a cryptocurrency linked to the FTX group on Sunday, then offered to buy out FTX. com on Tuesday before retracting on Wednesday.
The group is under investigation by the Securities Exchange Commission and the Department of Justice in New York, according to the New York Times citing sources familiar with the investigation. And the fall from favor has extended to the NBA, with the Miami Heat announcing that its venue, the FTX Arena, will be renamed.