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Bankrupt FTX hit by mysterious outflow of about $662 mn in past 24 hours

It's unclear exactly who's making the transactions, but you wouldn't expect to see these on-chain trades at this time: Alex Svanevik, chief executive officer at Nansen

crypto trading | cryptocurrency | cryptocurrencies

Suvashree Ghosh | Bloomberg 

Photo: Bloomberg
Samuel Bankman-Fried. Photo: Bloomberg

Sam Bankman-Fried’s bankrupt digital-asset exchange FTX was hit by a mysterious outflow of about $662 million in tokens in the past 24 hours, the latest twist in one of the darkest periods for the crypto industry.

Customers still coming to terms with the platform’s Friday plunge into Chapter 11 proceedings were subsequently confronted with what the general counsel of its US arm, Ryne Miller, described as “abnormalities with wallet movements.”

Miller said on Twitter that FTX is expediting the process of moving digital assets into cold storage -- which is unconnected to the internet -- “to mitigate damage upon observing unauthorized transactions.”

Blockchain analytics firm Nansen estimated the coins flowed out of both FTX’s and US exchanges. Paolo Ardoino, chief technology officer at stablecoin issuer Tether, referenced a tweet suggesting more than $30 million of the “FTX attacker’s” holdings in the token have been blacklisted.

“It’s unclear exactly who’s making the transactions, but you wouldn’t expect to see these on-chain trades at this time,” said Alex Svanevik, chief executive officer at Nansen.

The latest developments are another blow for the crypto sector, which is reeling from a year-long rout as well as the implosion of Bankman-Fried’s exchange and sister trading house Alameda Research. If the outflows are a security exploit, they would add to what’s shaping up to be a record year for attacks on the digital-token industry.

The main wallet belonging to FTX was drained of its entire balance in FTT during the incident, according to Nansen. The FTT coins are native to the exchange. Nansen said the overall outflows from FTX eventually ceased.

FTX’s descent into capped the downfall of one of crypto’s wealthiest moguls. The US is investigating how closely intertwined his businesses were and whether FTX mishandled customer funds.

Twitter was rife with protests apparently from aggrieved clients. They cited a community Telegram chat warning that FTX had been compromised and that some client accounts were drained. The claims couldn’t be immediately verified and several calls to FTX officials outside regular US business hours went unanswered.

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First Published: Sat, November 12 2022. 14:26 IST