The US Department of Justice (DOJ) is reportedly probing an apparent hack worth $372 million on crypto exchange FTX as it filed for bankruptcy on Nov 11.
Blockchain analytics unit Elliptic initially relayed that $663 million in various cryptocurrencies belonging to FTX was suspiciously on the move. Transfers worth $180 million turned out to be FTX sending funds into cold storage, while alleged hackers quickly swapped the remaining $477 million into ether and stablecoin DAI.
FTX CEO John Jay Ray III confirmed the hack the following day, and said the company was in contact with law enforcement regarding the matter. The value of crypto lost in the incident has since dropped to $372 million, per Bloomberg, which cites bankruptcy filings.
This latest probe is reportedly separate from existing fraud cases against former FTX CEO Sam Bankman-Fried. The DOJ investigation could send the hacker to prison for a maximum of 10 years if found guilty of as-yet hypothetical charges related to computer fraud.
Kraken’s chief security officer initially said the exchange was aware of the identity of the assailant, however later appeared to walk back those claims.
Bankman-Fried himself has also suggested in interviews that the hacker could be someone from within FTX, or someone who managed to install malware onto a former employee’s computer.
“I’ve narrowed it down to like eight people. I don’t know which one it was,” Bankman-Fried told YouTuber Tiffany Wong.
The disgraced entrepreneur, who is currently out on bail in California, was in charge of FTX when it reportedly funneled $10 billion in customer funds to affiliated trading unit Alameda Research over the years. Lawyers estimate FTX owes funds to up to one million users, with the largest 50 creditors out of pocket by some $3.1 billion.
Bankman-Fried now faces an eight-count federal indictment including wire and securities fraud charges. “This is one of the biggest financial frauds in American history,” US Attorney Damian Williams has said.
Former FTX and Alameda executives Gary Wang and Caroline Ellison have both pleaded guilty to federal criminal charges, and are cooperating with authorities with further investigations.
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Source: https://blockworks.co/news/ftx-hack-upon-bankruptcy-finally-attracts-us-feds