Cryptocurrency exchange FTX, which filed for bankruptcy Friday, is investigating whether crypto assets were stolen and has moved all its digital assets offline, the company said Saturday. The assets could be worth more than $400 million, said crypto risk management firm Elliptic.
In a tweet early Saturday, FTX general counsel Ryne Miller said the company “initiated precautionary steps” and moved all its digital assets to cold storage, meaning the crypto wallet is no longer connected to the internet. This follows the announcement Friday that the exchange filed for Chapter 11 bankruptcy.
Elliptic said although the theft is unconfirmed, $473 million in crypto assets were apparently stolen from FTX.
The process was “expedited” Friday evening “to mitigate damage upon observing unauthorized transactions,” Miller said in a tweet.
Miller tweeted late Friday that FTX is “investigating abnormalities” regarding wallet movements “related to consolidation of FTX balances across exchanges.” The facts are still unclear and the company will share more information as soon as possible, he added.
The stablecoins and other missing tokens are being quickly converted to ether, the second-largest cryptocurrency after Bitcoin, on decentralized exchanges, Elliptic said. Elliptic said it is a common technique used by hackers to prevent their funds from being seized.
FTX, until last week one of the most powerful players in the crypto industry, is experiencing a rapid collapse. Its 30-year-old founder and CEO Sam Bankman-Fried has resigned and has lost his $16 billion fortune in less than a week.
In its bankruptcy filing, FTX said it has between $10 billion and $50 billion of estimated liabilities and assets.
“I’m really sorry, again, that we ended up here,” Bankman-Fried wrote in a Twitter thread Friday. “Hopefully things can find a way to recover.”
Under a microscope
As scrutiny of crypto exchanges increases, Singapore-based crypto.com admitted to accidentally sending more than $400 million in Ethereum to the wrong account. Its CEO, Kris Marszalek, said on Twitter the transfer of 320,000 ETH was made three weeks ago to a corporate account at competing exchange Gate.io instead of to one of its offline, or “cold”, wallets.
And though funds were recovered, users are withdrawing from the platform fearing the same outcome as FTX. Binance CEO Changpeng Zhao issued a warning on Twitter saying, “if an exchange have to move large amounts of crypto before or after they demonstrate their wallet addresses, it is a clear sign of problems.”
‘We have since strengthened our process and systems to better manage these internal transfers,” Marszalek tweeted Sunday.