Strange FTX Hack Upon Bankruptcy Finally Attracts US Feds

Someone mysteriously withdrew hundreds of millions of dollars in crypto from FTX wallets as it declared bankruptcy last month


FTX’s Sam Bankman-Fried | Exclusive art by Axel Rangel modified by Blockworks


The US Department of Justice (DOJ) is reportedly probing an apparent hack worth $372 million on crypto exchange FTX as it filed for bankruptcy on Nov 11.

Blockchain analytics unit Elliptic initially relayed that $663 million in various cryptocurrencies belonging to FTX was suspiciously on the move. Transfers worth $180 million turned out to be FTX sending funds into cold storage, while alleged hackers quickly swapped the remaining $477 million into ether and stablecoin DAI.

FTX CEO John Jay Ray III confirmed the hack the following day, and said the company was in contact with law enforcement regarding the matter. The value of crypto lost in the incident has since dropped to $372 million, per Bloomberg, which cites bankruptcy filings.

This latest probe is reportedly separate from existing fraud cases against former FTX CEO Sam Bankman-Fried. The DOJ investigation could send the hacker to prison for a maximum of 10 years if found guilty of as-yet hypothetical charges related to computer fraud.

Kraken’s chief security officer initially said the exchange was aware of the identity of the assailant, however later appeared to walk back those claims.

Bankman-Fried himself has also suggested in interviews that the hacker could be someone from within FTX, or someone who managed to install malware onto a former employee’s computer.

“I’ve narrowed it down to like eight people. I don’t know which one it was,” Bankman-Fried told YouTuber Tiffany Wong.

The disgraced entrepreneur, who is currently out on bail in California, was in charge of FTX when it reportedly funneled $10 billion in customer funds to affiliated trading unit Alameda Research over the years. Lawyers estimate FTX owes funds to up to one million users, with the largest 50 creditors out of pocket by some $3.1 billion.

Bankman-Fried now faces an eight-count federal indictment including wire and securities fraud charges. “This is one of the biggest financial frauds in American history,” US Attorney Damian Williams has said. 

Former FTX and Alameda executives Gary Wang and Caroline Ellison have both pleaded guilty to federal criminal charges, and are cooperating with authorities with further investigations.

Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter now.

Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief.

Can’t wait? Get our news the fastest way possible. Join us on Telegram and follow us on Google News.


upcoming event

MON - WED, MARCH 18 - 20, 2024

Digital Asset Summit (DAS) is returning March 2024. This year’s event will be held in our nation’s capital, where industry leaders, policymakers, and institutional experts will come together to discuss the latest developments and challenges in the ever-evolving world of cryptocurrency. […]

upcoming event

MON - WED, SEPT. 11 - 13, 2023

2022 was a meme.Skeptics danced, believers believed.Eventually, newcomers turned away, drained of liquidity and hope.Now, the tide is shifting and it’s time to rebuild. Permissionless II is the brainchild of Blockworks and Bankless. It’s not just a conference, but a call […]

recent research

Sequencers: The Key to The Rollup Investment Thesis


Sequencers are one of the most explicit mechanisms in crypto for creating sustainable DAO-controlled revenue.



Grayscale Investments, Kraken and BlockFi are among the industry players floating support, and suggestions, as the comment period winds down


Bitcoin miners have had a tough few years — but in the Roblox metaverse, they’re thriving


“Polkadot and Cosmos share a similar vision where you have a range of heterogeneous blockchains working together,” Jafar Azam told Blockworks


Coinbase CEO Brian Armstrong says the SEC suit is “very different from others out there”


The SEC greenlighting a public offering is a nuanced process that is “not passing merit on the business,” industry exec says


The majority of survey respondents in Paypal’s metaverse survey want to get paid in crypto