United States: Hours after filing for Chapter 11 bankruptcy protection on Friday, defunct cryptocurrency trading platform FTX acknowledged "unauthorized access" to its accounts.
John Ray III, the troubled company's new CEO, said on Saturday that FTX is halting the ability to trade or withdraw funds and is taking action to safeguard customers' assets, according to a tweet from FTX general manager Raine Miller. The company said that FTX is also coordinating with law enforcement and regulators.
Uncertainty exists about the exact amount of money involved, but analytics company Elliptic estimated on Saturday that US$477 million was missing from the exchange.
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Tom Robinson, co-founder and chief scientist at Elliptic, said that FTX may have been storing assets when $186 million was transferred from its accounts.
Social media users began debating whether the exchange was hacked or whether an employee had stolen the money, a possibility that cryptocurrency analysts could not completely rule out.
FTX used to be one of the largest cryptocurrency exchanges in the world. When it filed for bankruptcy protection on Friday, its former CEO and founder Sam Bankman-Fried had already resigned and it was already billions of dollars in the hole.
According to its bankruptcy filing, the company listed over 130 affiliated companies around the world and its assets were valued between US$10 billion and US$50 billion.
Companies backing FTX are writing off investments, and the collapse of the once dominant exchange has resulted in the value of bitcoin and other digital currencies falling. Politicians and government officials are calling for tighter regulation of the burgeoning sector. Experts claim that the story is still developing.
Also Read: FTX collapses and files for bankruptcy
According to independent financial and economic commentator Francis Coppola, "We'll have to wait and see what the outcome is, but I think we'll see more dominoes fall and a lot more people losing their money and their savings." and that's really justified
Coppola and other analysts theorized that this may have been an inside job due to the timing and level of access the alleged hacker was able to obtain while stealing money from various departments of the business.
FTX announced on Saturday that it is transferring the majority of identifiable digital assets to a new "cold wallet custodian," which is essentially a method of offline asset storage devoid of remote control.
While this is unfortunate, it just goes to show how complicated this situation is. “It appears that the liquidators did not act quickly enough to prevent some sort of siphoning of funds from FTX after it filed for bankruptcy,” Coppola said.
At first, some believed that all the missing money could be the result of liquidators or bankruptcy administrators attempting to move assets to a safer location.
However, according to Molly White, a fellow at the Library Innovation Lab and a cryptocurrency researcher, it would be unusual for this to happen on a Friday night.
That appears to be quite different from what a liquidator might do to try to collect the money, she said. According to White, there are indications of possible insider involvement. "With so much access to the FTX system, it seems unlikely that someone who is not an insider could have carried out such a significant hack."
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According to Coppola, the demise of FTX emphasizes the need to regulate cryptocurrencies like traditional finance. Crypto is no longer in its infancy, he declared. "Common people are putting their entire life savings into this."