FTX says it is probing ‘abnormal transactions’ after potential hack

FTX is investigating abnormal transactions as analysts said hundreds of millions of dollars worth of crypto assets had been withdrawn as the exchange declared bankruptcy.

The potential hack is the latest blow for FTX, the cryptocurrency empire formerly controlled by 30-year-old entrepreneur Sam Bankman-Fried and until recently valued at $32bn, which filed for bankruptcy protection in the US on Friday.

Analysts estimated that there were more than $260mn worth of withdrawals. This was despite FTX’s previous inability to meet a surge of customer redemptions on concerns over its financial health and links to Alameda Research, Bankman-Fried’s proprietary trading group.

The run by customers led the founder to unsuccessfully seek billions of dollars to bail out the group.

Earlier this week, FTX had been poised for a rescue attempt by the world’s largest crypto exchange, Binance, led by Bankman-Fried’s arch-rival Changpeng Zhao.

However, the deal fell through after due diligence revealed substantial financial issues at FTX and subsequent attempts to cobble together another rescue package also collapsed.

On Saturday, the official Twitter account of FTX retweeted comments from Ryne Miller, the company’s general counsel in the US, who said it was “investigating abnormalities with wallet movements related to consolidation of FTX balances across exchanges”.

Outflows were estimated to be at least $266mn over the past 24 hours, according to Nansen, a Singapore-based blockchain analytics group, with $73mn withdrawn from FTX US alone.

Concerns over a potential hack were heightened after an administrator on the Telegram support group for FTX stated: “FTX has been hacked . . . Don’t go on FTX site as it might download Trojans.”

The probe into abnormalities followed the resignation of Bankman-Fried, who until this week was one of the crypto sector’s most successful and respected figures, with an estimated net worth of $24bn.

Bankman-Fried will be replaced by John J Ray, a restructuring specialist who oversaw bankruptcy cases for Enron and Nortel Networks. Ray said on Friday that FTX Group “has valuable assets that can only be effectively administered in an organised, joint process”.

The sprawling group, which had positioned itself as a posterchild for the crypto industry and advertised during the Super Bowl, has about 100,000 creditors and $10bn-$50bn of assets and liabilities, according to the company’s bankruptcy filing in Delaware federal court.

Venture capital firms with substantial exposure to FTX, including Sequoia and Paradigm, have in recent days marked their investments down to zero.

Another investor, SoftBank, is expected to follow suit with its own $100mn interest in the collapsing crypto exchange, according to a person familiar with the matter.

The US Securities and Exchange Commission is also investigating FTX, including the platform’s cryptocurrency lending products and management of customer funds, according to a person familiar with the matter.

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