FTX Tells Creditors $415 Million in Crypto Assets Was Stolen by Hackers

Bankrupt crypto exchange FTX said in a report to creditors on Tuesday that about $415 million in cryptocurrency had been stolen as a result of hacks.

Some $323 million (roughly Rs. 2,640 crore) in crypto had been hacked from FTX’s international exchange and $90 million (roughly Rs. 730 crore) had been hacked from its US exchange since it filed for bankruptcy on November 11, CEO John Ray said in a separate statement on Tuesday.

FTX founder Sam Bankman-Fried has been accused of stealing billions of dollars from FTX customers to pay debts incurred by his crypto-focused hedge fund, Alameda Research. Bankman-Fried has pleaded not guilty to fraud charges.

FTX told a bankruptcy judge in Delaware last week that it had recovered over $5 billion (roughly Rs. 40,830 crore) in crypto, cash, and liquid securities, nine weeks after declaring bankruptcy.

The company provided additional details on Tuesday, saying it had recovered $1.7 billion (roughly Rs. 13,890 crore) in cash, $3.5 billion (roughly Rs. 28,595 crore) in liquid cryptocurrency, and $300 million (roughly Rs. 2,450 crore) in liquid securities.

FTX did not provide an estimate of total liabilities but said it had identified important significant shortfalls at both its international and US crypto exchanges.

“We are making progress in our efforts to maximise recoveries, and it has taken a Herculean investigative effort from our team to uncover this preliminary information,” Ray said in the statement.

The crypto assets recovered to date include $685 million in Solana, $529 million (roughly Rs. 5,590 crore) in FTX’s proprietary FTT token, and $268 million (roughly Rs. 2,190 crore) in bitcoin, based on crypto prices on November 11, 2022. Solana, which was lauded by Bankman-Fried, lost most of its value in 2022.

During FTX’s initial investigation into hacks of its system, it uncovered a November asset seizure by the Securities Commission of the Bahamas, which led to a dispute between FTX’s US-based bankruptcy team and Bahamian regulators.

The two sides settled their differences in January, and Ray said on Tuesday that the Bahamian government was holding $426 million (roughly Rs. 3,447 crore) for creditors.

Bahamas Prime Minister Philip Davis referenced the dispute during a Tuesday event at the Atlantic Council in Washington, saying that Ray’s team had “come around” and accepted that the Bahamian asset seizure “was appropriate and perhaps has saved the day for many of the investors in FTX.” |

© Thomson Reuters 2023