US investigates how $550 million disappeared in hack after FTX bust

American prosecutors are investigating an alleged cybercrime that stole more than $370 million ($550 million) from FTX just hours after the cryptocurrency exchange filed for bankruptcy last month.

The US Department of Justice has opened a criminal investigation into the stolen assets, separate from the fraud case against FTX co-founder Sam Bankman-Fried, according to a person familiar with the case. US authorities managed to freeze part of the stolen funds, the person confirmed. However, the frozen assets represent only a fraction of the total loot.

Who Withdrew $372M From FTX Just Hours After The Company Collapsed? Founder Sam Bankman-Fried has suggested it was an inside job.

Who Withdrew $372M From FTX Just Hours After The Company Collapsed? Founder Sam Bankman-Fried has suggested it was an inside job.Credit:AP

It’s unclear whether the infiltration was an inside job, as Bankman-Fried indicated in interviews prior to his arrest, or the work of an opportunistic hacker bent on exploiting the vulnerabilities of a failing company. The conduct could amount to a computer fraud charge, which carries a maximum sentence of 10 years in prison.

The amount stolen is significantly less than the billions of dollars Bankman-Fried is said to be misusing when he was at the helm of FTX. Authorities say the 30-year-old founder, who is currently on bail and lives in California, fraudulently raised $1.8 billion from investors, used FTX funds to make risky bets with hedge fund Alameda Research and personal expenses cover up.

Department of Justice and Manhattan Attorneys’ Office spokesmen declined to comment.

FTX’s new chief executive, John J. Ray III, announced on Nov. 12 that “unauthorized access” to FTX assets had occurred a day earlier, the same day the property filed for bankruptcy.

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The investigation is being led by the DOJ’s National Cryptocurrency Enforcement Team, a network of prosecutors focused on investigations into digital assets, a person familiar with the case said. The team is working with the Manhattan federal prosecutors conducting the wide-ranging criminal investigation that led to Bankman-Fried’s arrest this month.

The amount withdrawn from FTX by the unidentified actor was about $372 million, according to the bankruptcy filing. Authorities managed to freeze funds on certain platforms because those outlets were cooperating with law enforcement, the person confirmed. That’s not always the case, especially with offshore exchanges.

https://www.smh.com.au/business/markets/us-probes-how-550-million-vanished-in-hack-after-ftx-bankruptcy-20221228-p5c91l.html?ref=rss&utm_medium=rss&utm_source=rss_business US investigates how $550 million disappeared in hack after FTX bust

Brian Lowry

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