FTX hit by rogue transactions analysts saw over $600 million outflows

Reuters, HONG KONG, SINGAPORE, and LONDON, Nov. 12 - On Saturday, FTX experienced further instability after the cryptocurrency exchange reported discovering unauthorized access and experts said that hundreds of millions of dollars' worth of assets had been removed under "strange circumstances." One of the most high-profile cryptocurrency meltdowns, FTX filed for bankruptcy on Friday after traders rushed to remove $6 billion off the platform in only 72 hours and rival exchange Binance abandoned a planned rescue package. We are in the process of deleting the trading and withdrawal capabilities, among other things, he stated. Sam Bankman-Fried, the exchange's 30-year-old founder who is well known for wearing shorts and a T-shirt, has gone from being the face of the cryptocurrency industry's accomplishments to the main character of the sector's worst crash as a result of the exchange's rapid fall from grace. current updates

FTX claims to be looking into "unauthorized transactions."

Exclusive: FTX Hedge fund missing at least $1 billion in customer funds Financial Times: Galois Capital claims that half of its capital is locked on the FTX exchange.

New information about the bankruptcy of FTX and the missing money

Bankman-Fried, a resident of the Bahamas, has also come under scrutiny regarding his movements. On Twitter, he shot down allegations that he had traveled to South America. He texted the word "Nope" in response to Reuters' inquiry on whether he had taken a flight to Argentina. He claimed to be in the Bahamas to Reuters.

At least $1 billion in customer cash have disappeared from the platform due to the upheaval at FTX, sources told Reuters on Friday. $10 billion in client funds had been transferred by Bankman-Fried. Ryne Miller, the U.S. general counsel for FTX, tweeted on Saturday that the company was moving its digital assets into "cold storage" "to mitigate damage upon spotting unlawful activities," Miller wrote.

In order to protect against hackers, cold storage refers to cryptocurrency wallets that are not connected to the internet.

FTX International and FTX United States have lost $659 million in the last 24 hours, according to blockchain analytics company Nansen. Separate blockchain analytics company Elliptic reported that $186 million was probably put into secure storage by FTX, while $515 million in cryptoassets were "suspected to have been stolen."

Bitcoin exchange "We can confirm that our team is aware of the identity of the account connected to the ongoing FTX hack," said Kraken. "We are committed to working with law enforcement to ensure that they have everything they need to properly investigate this matter."

When contacted for comment regarding the outflows or Kraken's assertion, FTX was unavailable. FTX Trading claimed in its bankruptcy filing that firm has assets worth between $10 billion and $50 billion, liabilities between between $10 billion and $50 billion, and more than 100,000 creditors. As CEO, Ray, a restructuring specialist, was chosen.

According to a document provided by Bankman-Fried with investors on Thursday and seen by Reuters, FTX has $14.6 billion in assets and $13.86 billion in liabilities. Only $900 million of those assets, however, were liquid, creating a liquidity shortage that resulted in the company declaring bankruptcy. Investors were surprised by the drop, which renewed calls for regulation of the cryptoasset industry, which has suffered losses all year due to the decline in bitcoin prices.

After the FTX meltdown, "things will continue to simmer," according to Alan Wong, operations manager of the Hong Kong Digital Asset Exchange.

With a $8 billion difference between liabilities and assets, FTX's insolvency will set off a domino effect that will cause a string of investors connected to FTX to file for bankruptcy or be compelled to sell their assets. Jump, a cryptocurrency market maker, revealed late on Saturday that the company still had a healthy amount of capital and that it had an undisclosed exposure to FTX. FTX has raised almost $2 billion from reputable investors since its creation in 2019 including Sequoia, SoftBank, BlackRock, and Temasek. At a $32 billion valuation, FTX had secured $400 million from investors in January.

SoftBank and Sequoia Capital declared that they were writing down their FTX investments to zero.

According to a person familiar with the situation, cryptocurrency exchange Coinbase Global Inc (COIN.O) will likewise write off the investment its ventures arm made in FTX in 2021.

After Binance abandoned its rescue agreement for FTX on Wednesday, Bitcoin went below $16,000 for the first time since 2020. It was trading at roughly $16,800 on Saturday, more than 75% below the record high of $69,000 it attained in November of last year.

The value of FTX's token, FTT, fell by over 91% this week. Shares of businesses involved with cryptocurrencies and the blockchain have also decreased.

Since the market valuation of cryptocurrencies is $890 billion, compared to the $41 trillion market cap of U.S. equity, "we believe cryptocurrency markets remain too tiny and too compartmentalized to generate contagion in financial markets," Citi analysts wrote. This is the main way financial markets could suffer because FTX raised $1.8 billion over four years from venture capital and pension funds. It may also have minor consequences for portfolio shocks in a turbulent macro climate.

According to a source with knowledge of the investigation, the US Securities and Exchange Commission is looking into how FTX.com manages customer cash and its involvement in cryptocurrency lending.

The Financial Times reported on Saturday that the hedge fund Galois Capital had half of its assets locked on FTX, citing a letter from co-founder Kevin Zhou to investors and putting the sum at roughly $100 million.