DoJ Launches Investigation into $372 Million FTX Hack

Reading Time: 2 minutes
  • Federal prosecutors are investigating the hack that saw some $372 million in crypto stolen from FTX last month
  • The funds were being sent from hot wallets to cold storage when the hack occurred
  • Kraken identified the hackers as FTX executives, suggesting an inside job

Federal prosecutors are investigating the hack that saw some $372 million in crypto stolen from FTX as it was being sent to cold wallets last month. Some of the stolen funds have been frozen by US authorities, but it is unclear if the infiltration was an inside job or the work of a hacker seeking to take advantage of the company’s vulnerabilities. The Department of Justice (DoJ) has launched this separate criminal probe into the stolen assets in addition to the fraud case against FTX co-founder Sam Bankman-Fried. 

“Unauthorized Access”

The hack took place on November 12, just 24 hours after FTX filed for Chapter 11 bankruptcy, when FTX was sending over $500 million worth of crypto from the company’s hot wallets to its cold storage. However, a large majority of these funds didn’t make it, with Chainalysis initially putting the figure at $477 million:

  • $278m on Ethereum
  • $106m on Solana
  • $89m on BSC
  • $4m on Avalanche
  • Over $220 million swapped for ETH or DAI through decentralized exchanges

This figure was revised down to $372 in the FTX bankruptcy filing, with FTX’s current chief executive, John J Ray III, revealing later on the 12th that there had been “unauthorized access” to FTX assets a day earlier, the same day the estate had filed for bankruptcy.

Kraken Fingered FTX Execs

The investigation is being led by the National Cryptocurrency Enforcement Team of the Department of Justice, which is working with Manhattan federal prosecutors who are conducting a criminal investigation that led to the arrest of FTX co-founder Sam Bankman-Fried. Some of the stolen funds were frozen on certain platforms such as Kraken, who initially identified the recipients as FTX executives.

If the hacker is identified they could face a charge of computer fraud, which carries a maximum sentence of 10 years in prison. Former FTX CEO Bankman-Fried is accused of fraudulently raising $1.8 billion from investors and using FTX funds for personal expenses and risky bets at hedge fund Alameda Research.