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Collapsed cryptocurrency trading firm FTX confirmed that its accounts were subjected to “unauthorized access” hours after the U.S. firm filed for bankruptcy protection on Friday.
According to a tweet from FTX General Counsel Ryne Miller, the struggling company’s new CEO, John Ray III, said Saturday that FTX is shutting down the ability to trade or withdraw funds and take steps to protect customers’ assets.
FTX is also coordinating with law enforcement and regulators, the company said.
Exactly how much money was involved is unclear, but analyst firm Elliptic estimated on Saturday that the exchange lost $477 million (£403 million).
Elliptic co-founder and chief scientist Tom Robinson said another $186 million (£157 million) was transferred from FTX’s accounts, but it was likely that FTX moved assets to storage.
There has been debate on social media over whether the exchange was hacked or the funds were stolen by company insiders, a possibility that crypto analysts cannot rule out.
According to its bankruptcy filing, the company values its assets at between $10bn (£8.45m) and $50bn (£42.3m) and has listed more than 130 related companies globally.
The breakup of the once-giant exchange is sending shockwaves across the industry, with companies backing FTX writing down investments and the price of bitcoin and other digital currencies falling.
Politicians and regulators have called for tighter oversight of the clunky industry.
“We’re going to have to wait and see what the consequences are, but I think we’re going to see more dominoes fall and a lot of people are going to lose their money and their savings,” said independent finance and economics expert Francis Coppola (Frances Coppola) said. commentator. “That was tragic, really.”
The timing and extent of the access that the hypothetical hackers appear to have achieved, stealing money from multiple parts of the company, has led Ms Coppola and other analysts to believe it may have been an inside job.
FTX said Saturday that it is moving as many digital assets as possible to a new “cold wallet custodian,” essentially a way to store assets offline without allowing remote control.
“It doesn’t seem like the liquidators are moving fast enough to stop FTX from somehow taking money out of FTX after filing for bankruptcy, which is bad, but it just shows how complicated this thing is,” Ms Coppola said.
Initially, some hoped that maybe all the lost funds were liquidators or receivers trying to move the assets to a safer place. But Molly White, a cryptocurrency researcher and fellow at the Harvard Library Innovation Lab, said it was unusual for that to happen Friday night.
“It looks very different from what they might have done if the liquidators were trying to get the funds,” she said.
Ms White also said there were indications that insiders may have been involved. “It seems unlikely that someone who is not an insider could have accomplished a hack of this magnitude with so many FTX system access.”
Ms Coppola said the FTX debacle highlighted the need for cryptocurrencies to be regulated like traditional finance.
“Cyrpto is no longer in its early stages,” she said. “We let the average person put their life savings into it.”
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