Embattled cryptocurrency exchange FTX said Saturday that it was moving funds into offline storage after reporting "unauthorized transactions."
Analysts said millions of dollars worth of assets had been
withdrawn from the platform.
"Following the Chapter 11 bankruptcy filings – FTX US
and FTX [dot] com initiated precautionary steps to move all digital assets to
cold storage. Process was expedited this evening – to mitigate damage upon
observing unauthorized transactions," FTX U.S. general counsel Ryne Miller
tweeted.
Cold storage refers to crypto wallets that are not connected
to the internet to guard against hackers.
Miller had previously written that FTX was
"investigating abnormalities with wallet movements related to
consolidation of FTX balances across exchanges," although noting that
facts were unclear "as other movements [were] not clear."
An administrator in the official FTX Telegram channel wrote
that "Ftx has been hacked."
That administrator told users not to visit the FTX site
"as it might download Trojans."
"Some funds were retrieved," the FTX administrator
wrote.
Coindesk reports that the message was pinned by Miller.
FTX did not immediately return FOX Business' request for
comment on the matter.
Figures from the Singapore-based analytics firm Nansen
showed a one-day net outflow from FTX of about $266 million, with $73 million
withdrawn from FTX U.S.
Reuters, citing two people familiar with the matter,
reported that at least $1 billion of customer funds had disappeared and that
people told the news outlet that Bankman-Fried had secretly transferred $10
billion of customer funds from FTX to his trading company Alameda Research.
Two sources told Reuters that Bankman-Fried – in a meeting
he confirmed took place – shared records with other senior executives that
revealed the financial hole.
Spreadsheets reportedly showed that between $1 and $2
billion dollars of the funds were not accounted for among Alameda's assets and
that the spreadsheets did not indicate where the money was moved.
In text messages to Reuters, Bankman-Fried said he
"disagreed with the characterization" of the $10 billion transfer.
"We didn't secretly transfer," he said. "We
had confusing internal labeling and misread it."
When asked about the missing funds, Bankman-Fried responded:
"???"
Upon additional examination, FTX legal and financial teams
purportedly learned that Bankman-Fried implemented what two people described as
a "backdoor" in FTX's book-keeping system, allowing him to execute
commands to alter the company's financial records without alerting others.
Bankman-Fried denied implementing a "backdoor."
FOX Business' request for further comment from Bankman-Fried
was not immediately returned.
This all comes after the Bahamas-based FTX filed for Chapter
11 bankruptcy protection.
A rescue deal with rival exchange Binance fell through.
Reuters said that the U.S. Securities and Exchange
Commission and the Department of Justice are investigating FTX.com's handling
of customer funds, as well its crypto-lending activities.
Reuters contributed to this report.
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