Struggling cryptocurrency exchange FTX said on Saturday it was moving funds to offline storage after reports of “unauthorized transactions”. Analysts said assets worth millions of dollars had been pulled from the platform. “Following the Chapter 11 bankruptcy filings – FTX US and FTX [dot] com initiated precautionary measures to transfer all digital assets to cold storage. The process was accelerated this afternoon – to mitigate the damage after unauthorized trading was observed,” FTX US general counsel Ryan Miller tweeted. Cold storage refers to crypto wallets that are not connected to the internet to protect them from hackers. INSIDE THE FTX CRYPTO EXCHANGE CRASH: EVERYTHING YOU NEED TO KNOW Miller had previously written that FTX was “investigating anomalies with wallet movements related to the consolidation of FTX balances on exchanges,” though he noted that the facts were unclear “like other movements [were] not clear.” An admin on the official FTX Telegram channel wrote that “Ftx has been hacked.” This administrator told users not to visit the FTX website “as it may download Trojans”. “Some funds recovered,” FTX admin wrote. This illustrative photo shows a smartphone screen displaying the logo of FTX, the crypto exchange platform, with a screen showing the FTX website in the background in Arlington, Virginia, on February 10, 2022. (OLIVIER DOULIERY/AFP via Getty Images / Getty pictures) Coindesk reports that the message was pinned by Miller. FTX did not immediately return FOX Business’ request for comment on the matter. Data from Singapore-based analyst Nansen showed a one-day net outflow from FTX of about $266 million, with $73 million withdrawn from FTX US Sam Bankman-Fried, founder and CEO of FTX Cryptocurrency Derivatives Exchange, during an interview on an episode of Bloomberg Wealth with David Rubenstein in New York, August 17, 2022. (Jeenah Moon/Bloomberg via Getty Images / Getty Images ) Reuters, citing two people familiar with the matter, said at least $1 billion of client funds had disappeared and that people told the news agency that Bankman-Fried had secretly transferred $10 billion of client funds from FTX to his trading firm Alameda Research. Two sources told Reuters that Bankman-Fried – in a meeting he confirmed took place – shared files with other senior executives that revealed the financial hole. The spreadsheets reportedly showed that between $1 billion and $2 billion of the funds were not included in Alameda’s assets, and that the spreadsheets did not show where the money was moved. GET THE FOX BUSINESS ON THE GO BY CLICKING HERE In text messages to Reuters, Bankman-Fried said he “disagrees with the characterization” of the $10 billion transfer. “We didn’t smuggle,” he said. “We had internal labels mixed up and misread it.” When asked about the missing funds, Bankman-Fried replied: “???” In this photo, the FTX website is displayed on a computer on Nov. 10, 2022, in Atlanta. (Photographic illustration by Michael M. Santiago/Getty Images / Getty Images) Upon further investigation, FTX’s legal and finance teams reportedly learned that Bankman-Fried implemented what two people described as a “backdoor” into FTX’s bookkeeping system, allowing him to execute commands to alter the company’s financial records without notifying others. Bankman-Fried denied implementing a “backdoor.” FOX Business’ request for further comment from Bankman-Fried was not immediately returned. CLICK HERE TO READ MORE ABOUT FOX BUSINESS All this comes after Bahamas-based FTX filed for Chapter 11 bankruptcy protection. A bailout deal with rival exchange Binance failed. Reuters reported that the US Securities and Exchange Commission and the Department of Justice are investigating FTX.com’s handling of client funds, as well as its crypto-lending activities. Reuters contributed to this report.
