The large amount of FTX assets is still a mystery
The lawyers appointed by the court to liquidate assets for the collapsed cryptocurrency exchange FTX painted a bleak picture of the company’s financial situation and the fate of billions of dollars being “frozen”.
“A large amount of property has been stolen or mysteriously disappeared,” James Bromley, a partner at the law firm Sullivan & Cromwell, which was appointed by the court to represent FTX, told the court.
James Bromley, an attorney for FTX, and John J. Ray III, the new CEO of FTX in court on November 22. Image: Bloomberg.
FTX filed for Chapter 11 bankruptcy on November 10, after running out of liquidity left the company in debt 8 billion USD. The process of collapse was so rapid that individual investors and large funds scrambled to recover billions of dollars in crypto they had deposited on the FTX platform.
“Personal Territory” by Sam Bankman-Fried
However, in just over a week of handling, the poor management of FTX under Bankman-Fried made it impossible for lawyers to get a full picture of the company’s financial position, according to Mr. Bromley. hearing.
Lawyers on the new management team of FTX announced at the bankruptcy hearing that it would create a vast network to identify and recover billions of dollars transferred through FTX, which they called “” personal territory” by founder Sam Bankman-Fried.
“FTX is under the control of inexperienced and naive individuals. We are dealing with a global company, but run as a personal territory by Sam Bankman-Fried. Some of them, or even all of them are compromised individuals,” said Bromley.
FTX bankruptcy attorneys were surprised by the way Sam Bankman-Fried ran a large company. Image: Insiders.
According to this lawyer, FTX and Sam Bankman-Fried used a significant amount of the company’s money to pay for things unrelated to business activities. The document also revealed that one of FTX’s branches in the US bought real estate worth nearly 300 million USD in the Bahamas for senior managers.
“Based on preliminary investigations, most of FTX’s real estate purchases involving homes and resort properties are used by senior corporate executives,” Bromley said.
The fall of the empire was once valued at 40 billion USD led to investigations by the US Securities and Exchange Commission (SEC) and the Department of Justice, alleging that FTX embezzled customer deposits.
According to many documents published by the father, the investment fund Alameda Research is considered a “sister company” to FTX because it was founded by Sam Bankman-Fried. Alameda Fund then secretly used users’ funds on the FTX exchange to blind investors. They have silently transacted billions of dollars without users knowing.
The shady relationship between FTX and the investment fund Alameda Research is believed to be the main cause of the collapse. Image: U Today.
Mr. Bromley also said the number of individual and institutional customers that FTX owes could be in the millions. According to court documents, FTX is in debt 3.1 billion USD from the 50 largest creditors, of which the first 10 names alone accounted for 1.45 billion USD.
The journey to find the hacked money
Since its bankruptcy, FTX has been the target of cyber attacks. According to BloombergIn just the first 24 hours after the crash, the FTX exchange was hit by a mysterious outflow of approximately 662 million USD. This is the latest twist in one of the darkest times for the crypto industry.
Blockchain analytics firm Nansen has given an overall loss of cash flow estimate of about 662 million USDemphasizing operations on both international FTX and US FTX exchanges.
Meanwhile, an independent analysis by the company Elliptic claims that they have discovered 475 million USD stolen from the FTX exchange in illegal transactions.
475 million USD stolen from the FTX exchange in illegal transactions. Image: CryptoSlate.
In court, Mr. Bromley revealed that the FTX side is still in regular contact with the US Department of Justice to track down this money. Meanwhile, the cybercrime unit of the Manhattan attorney’s office has also launched a wide-ranging investigation.
Fortunately for FTX, modern technology can help investigators track down the clues of attacks. Specifically, every digital currency today is built on the blockchain. Once stolen, users can track the movement of that money and easily identify the thieves.
According to Wiredafter a huge amount of nearly half a billion USD was withdrawn from FTX, cryptocurrency watchers around the world are closely monitoring the destination and looking for any clues that reveal the culprit.
In addition, the authorities are also focusing on observing every movement of the wallet address where the hacked money was transferred in the first 24 hours after the theft occurred.
Tracking the activity of blockchains can help track down the culprit behind the FTX exchange hack. Image: CryptoSlate.
“We are definitely monitoring the movement of this money. This thief has hundreds of millions of dollars but it is like robbing a bank and trying to get as much money as he can bring. Now everyone knows this money is related to a robbery. What can that hacker do with it?”, said Chris Janczewski, head of investigations at TRM Labs.
According to Elliptic’s analysis, hackers could be “laundering” by mixing FTX funds with other users’ funds. However, blockchain analysts have proven they can fully expose this trick, especially when users have to deposit a huge amount of money to perform this behavior.