FTX Is Shutting Down Trading And Withdrawals After $477 Million Hack

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In what appears to be one of the largest cryptocurrency hacks on record, the exchange FTX has announced that it will be shutting down trading and withdrawals following an apparent hack that saw more than $477 million in digital assets stolen from its storage wallets. The company says the hack occurred on November 15, although it was only discovered and confirmed in recent days after the stolen tokens were moved to another address. The FTX team says it has contacted law enforcement agencies, who are actively investigating the case and hope to recover some or all of the stolen funds.

The bankrupt cryptocurrency exchange’s new CEO and chief restructuring officer, John Ray, reportedly stated in a statement shared on Twitter by the business’ general counsel, Ryne Miller, that the exchange is “in the process of removing trading and withdrawal functionality” and that it is “moving as many digital assets as can be identified to a new cold wallet custodian.”

The information was revealed while the defunct exchange was investigating what it is calling “unauthorised transactions” that began only hours after FTX filed for Chapter 11 bankruptcy in the US.

Elliptic, a blockchain analytics firm, claims that an admin in the FTX Telegram Channel exposed the purported hack. Miller afterwards tweeted that the wallet transfers were unusual.
According to statistics from Singapore-based analytics firm Nansen that was published overnight, more than $2 billion in net outflows have happened from the FTX global exchange and its U.S. branch over the course of the previous seven days, of which $659 million occurred in the last 24 hours.

Elliptic found that $663 million worth of different tokens had been removed from FTX’s cryptocurrency wallets. Theoretically, $477 million of that total was taken during the alleged crime, and FTX is assumed to have moved the remaining funds into secure storage.

Elliptic discovered that stablecoins and other tokens are being swiftly exchanged to ether and dai via decentralised exchanges, a method that the company claims is frequently utilised by hackers to avoid having their loot confiscated.

The method that these assets have been moved, according to Elliptic’s chief scientist Tom Robinson, “is highly questionable.” Similar transaction patterns have been seen in previous large-scale thefts, where the stolen money is instantly traded at decentralised exchanges to avoid seizure.

The exchange is cooperating with law enforcement and the relevant regulators to handle the compromise, according to the new CEO of FTX, and is making “every effort” to safeguard all assets throughout the globe.

Miller, FTX’s general counsel, stated that the choice to store digital assets in cold storage was taken “to lessen harm upon identifying criminal activity.”

Owners of cryptocurrencies can choose to store their money “hot,” “cold,” or a combination of the two. A hot wallet is connected to the internet and grants owners reasonably easy access to their coins so they may access and use their cryptocurrency. In contrast to cold storage, which typically refers to cryptocurrency kept on wallets whose private keys are not linked to the internet, a hot wallet allows owners to access and use their cryptocurrency. The convenience of hot storage comes at the cost of a possible criminal vulnerability.

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