Things are going from bad to worse for bankrupt crypto exchange FTX, with officials confirming that unauthorized transactions drained millions of remaining user funds from wallets over the weekend.  

See relate article: FTX files for bankruptcy, Sam Bankman-Fried steps down as CEO

Fast facts

  • John Ray, the new FTX Chief Restructuring Officer and CEO, confirmed on Sunday in a statement that “unauthorized access” to certain assets had occurred, following reports of suspicious activity on the platform. 
  • Though FTX officials have not specified the amount of assets missing, blockchain analysis firm Elliptic estimated that US$477 million was lost in the suspected theft.  
  • The theft could be yet another hit to investors with funds stuck in the illiquid exchange. An balance sheet shared with investors a day before its bankruptcy showed US$9 billion in liabilities and only US$900 million in liquid assets, according to a Monday Bloomberg report
  • After filing for Chapter 11 bankruptcy on Friday, FTX wallets were being drained to be moved to cold storage, a process which was expedited “to mitigate damage upon observing unauthorized transactions,” General Counsel at FTX US Ryne Miller said in a tweet Saturday.
  • The exchange is in “the process of removing trading and withdrawal functionality and moving as many digital assets as can be identified to a new cold wallet custodian,” said FTX CEO Ray.
  • In response to the incident, the company will be “coordinating with law enforcement and relevant regulators,” Ray added.

See relate article: Bahamian regulator contradicts FTX, says no approval given for fund withdrawals