FTX crisis deepens as beleaguered exchange faces potential hack

FTX crisis deepens as beleaguered exchange faces potential hack

The FTX crisis shows no signs of abating, and the exchange now faces the specter of a potential hack.

Officials at FTX appeared to confirm the hack on Telegram and urged users to delete all apps associated with FTX and avoid the site altogether.

Mysterious outflows point to potential hack

FTX wallets saw a flurry of activity late Friday, as more than $600 million left the exchange’s wallets, with no clarity on who was behind the transactions or why. The wallet address to which the funds are being transferred revealed that it had received funds from a number of international and US-based wallets linked to FTX. The wallet collected over 83,878.63 ETH in just over two hours as of 9:20 PM ET.

FTX officials soon revealed on their official Telegram channel that the exchange had been hacked, urging users to delete any FTX apps on their devices and not install any updates. In addition, they also urged users to avoid the FTX website.

“FTX has been hacked. FTX apps are malware. Delete them. Chat is open. Do not access the FTX website as it may download trojans.”

Speculation about activities as rumors swirl

Blockchain investigators were quick to speculate on the transfers, raising questions about the company’s intent. Some investigators saw the transfer as the beginning of the bankruptcy process before rumors of an external hack surfaced. Users pointed to the fact that some of the transactions included derogatory notes and messages directed at the FTX founder Sam Bankman-Fried.

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Other users suggested that the transfer of funds was coordinated by someone who was part of the FTX founder’s inner circle. However, Twitter and crypto speculator ZachXBT tweeted that several former FTX employees confirmed that they do not recognize any of the ongoing transfers. On-chain data sources showed that Ethereum, Solana and Binance Smart Chain tokens had been moved from FTX’s official wallets to decentralized exchanges such as 1Inch.

FTX General Counsel Ryne Miller stated that FTX was investigating abnormal movements in wallet funds related to FTX across exchanges.

“Investigation of wallet movement abnormalities related to consolidation of FTX balances across exchanges – obscure facts that other movements do not clear. Will share more information as soon as we have it.”

FTX remains silent

Curiously, the transfers have yet to be officially processed by FTX management and come on the same day the exchange filed for Chapter 11 Bankruptcy protection after losing billions in user funds. FTX wallet holders also reported seeing their balances drop to $0 in their FTX and FTX US wallets. At midnight, the FTX login portal went down, giving users a “503 error” every time they tried to login. However, the site remains online.

“Several people are saying their FTX balance is now showing $0 as soon as this attack started. Previously it was showing their balance but it just couldn’t be withdrawn.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial or other advice.

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