There’s nothing quite like kicking someone when they’re down.
It’s currently being reported that FTX is in the process of being hacked, with at least one admin of an FTX Community Chat on Telegram confirming the event.
The Telegram admin, whom goes by the name Rey, commented, “FTX has been hacked. All funds seem to be gone. FTX apps are malware. Delete them. Chat is open. Don’t go on ftx site as it might download Trojans.”
Given that the crypto wallet addresses are currently known by the crypto public, users have been tracking movements within the wallet for the past several hours. One Twitter user, @Dogetoshi, initially highlighted it by suggesting that liquidators might be getting the bankruptcy process underway.
Suspicions quickly grew however, after the wallet first exchanged $26.1 million in Tether for DAI, before moving on to then sell stETH and transfer $53.0 million in Solana funds to a new address. After several more transactions, Ryne Miller, the General Counsel of FTX US, indicated the firm was “investigating abnormalities with wallet movements related to consolidation of ftx balances across exchanges.”
Twenty minutes later, it was being suggested by many within the crypto world to uninstall the FTX app from mobile devices, suggesting an auto-update was being pushed to devices, which potentially contains malware. At the same time, funds exiting FTX wallets quickly grew to hundreds of millions of dollars in the form of multiple coins, including DAI, USDC, and USDT.
Separately, it was reported by Reuters tonight that at least $1.0 billion of client funds are missing from FTX, which is believed to be unrelated to the ongoing hack. Of the $10 billion that is known to have been transferred from FTX to Alameda Research, the firms sister hedge fund, a “large portion” is said to have disappeared, with one source placing the missing funds at between $1.0 billion and $2.0 billion, while a second source placed the missing funds at $1.7 billion.
The discovery of missing funds was reportedly identified within a spreadsheet provided by Bankman-Fried to investors on Sunday. Information on where the money was moved to was not provided, with FTX legal and finance teams reportedly later discovering a “backdoor” had been installed within the firms bookkeeping system, which of course was built using bespoke software.
The backdoor allegedly enabled SBF to alter financial records without alerting other people, which is said to include external auditors. This enabled the transfer of funds from FTX to Alameda to occur without internal compliance or accounting red flags popping up.
SBF in a message to Reuters reportedly denied such a backdoor exists.
As for the FTX hack, some members of the crypto industry simply aren’t having it.
Information for this briefing was found via the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.