The United States Department of Justice (DOJ) has initiated an inquiry to investigate the likely cause of the hack that happened in the insolvent FTX Exchange right after the company filed for bankruptcy protection.
A report from Bloomberg revealed that the DOJ’s probe as regards the cybercrime that occurred in the exchange will be conducted independently of the ongoing fraud case against the former CEO, Sam Bankman-Fried. The hack is compared to cybercrime, which carries a maximum ten-year prison sentence.
It is unclear whether the hack was carried out by an FTX employee, as suggested by Bankman-Fried prior to his arrest, or whether an outsider victimized a suffering company in order to commit the cybercrime. However, it is certain that the US authorities have frozen a portion of the stolen assets, says a person familiar with the matter.
The report also highlighted that the probe will be conducted by the DOJ’s National Cryptocurrency Enforcement Team. The team will work in collaboration with Federal Prosecutors in Manhattan, in charge of the criminal investigation that resulted in the arrest of Bankman-Fried.
The hacker was reported to have stolen $372 million from the defunct exchange, which is considered to be significantly less than the $1.8 billion investors’ funds that were allegedly mismanaged by Bankman-Fried.
The FTX Hack Saga
In November, a General Counsel at FTX.US. Ryne Miller confirmed on Twitter that a malware attack occurred in the insolvent exchange the same day the firm filed for bankruptcy. He highlighted that FTX was investigating an unusual wallet movement associated with the consolidation of foreign accounts that occurred in the exchange at the time.
Investigating abnormalities with wallet movements related to consolidation of ftx balances across exchanges – unclear facts as other movements not clear. Will share more info as soon as we have it. @FTX_Official
— Ryne Miller (@_Ryne_Miller) November 12, 2022
Binance exchange later announced that it was pausing all deposits of FTT tokens to protect its users following reports that new FTT tokens worth $380 million were released into the crypto market.
We’ve noticed a suspicious movement of a large amount of $FTT by the token’s contract deployers (https://t.co/wIgu5owvV0).#Binance has paused deposits of $FTT to keep users safe.
Our team is investigating the situation and will provide more updates if available. Thank you.
— Binance (@binance) November 13, 2022
Chainalysis, a consulting service firm also revealed that the stolen FTX assets were converted from Ethereum to Bitcoin. The firm issued a warning to exchanges to be vigilant in case the hacker attempted to withdraw money.
Later in the month of November, ZachXBT reported via chainabuse that the FTX attackers were able to transfer funds to OKX using the Bitcoin ChipMixer. Approximately $4.1 million (255 BTC) were transferred to OKX at the time.
The report also hinted that the FTX attacker first deposited bitcoin inter ChipMixer after using Ren Bridge. Ren Bridge (also known as RenVM) is a DeFi protocol that enables users to transfer digital assets between blockchains
