Yahoo Finance Here's the latest on the FTX fiasco
This post has been updated with additional Reuters reporting.
(Reuters)- Collapsed crypto exchange FTX said on Saturday it had seen "unauthorized transactions," with analysts saying millions of dollars worth of assets had been withdrawn from the platform.
Blockchain analytics firm Elliptic said that around $473 million worth of cryptoassets were "moved out of FTX wallets in suspicious circumstances early this morning," but that it could not confirm that the tokens had been stolen.
FTX U.S. general counsel Ryne Miller said in a tweet shortly after 0700 GMT on Saturday that the firm had "expedited" the process of moving all digital assets to cold storage "to mitigate damage upon observing unauthorized transactions."
Cold storage refers to crypto wallets that are not connected to the internet to guard against hackers.
Earlier on Saturday, Miller said in a tweet that he was "investigating abnormalities with wallet movements related to consolidation of FTX balances across exchanges."
FTX did not respond to a Reuters request for comment.
FTX's token FTT plunged by around 91% this week. Shares of cryptocurrency and blockchain-related firms have also declined.
'FTX has been hacked'
Prior to Miller's tweets, FTX officials appeared to confirm rumors of a hack on the firm's Telegram channel, according to a CoinDesk report which said that the exchange had instructed customers to delete FTX apps and avoid its website.
"FTX has been hacked," an account administrator in the FTX Support Telegram channel wrote in a message, according to CoinDesk.
Reuters could not immediately verify the details posted on FTX's private Telegram channel.
FTX filed for bankruptcy on Friday, one of the highest profile crypto blowups, after traders rushed to withdraw $6 billion from the platform in just 72 hours and rival exchange Binance abandoned a proposed rescue deal.
In its bankruptcy petition, FTX Trading said it has $10 billion to $50 billion in assets, $10 billion to $50 billion in liabilities, and more than 100,000 creditors. John J. Ray III, a restructuring expert, was appointed to take over as CEO.
The U.S. securities regulator is investigating FTX.com's handling of customer funds amid a liquidity crunch, as well its crypto-lending activities, a source with knowledge of the inquiry said.
Hedge fund Galois Capital had half its assets trapped on FTX, the Financial Times reported on Saturday, citing a letter from co-founder Kevin Zhou to investors and estimating the amount to be around $100 million.
The collapse shocked investors and prompted fresh calls to regulate the cryptoasset sector, which has seen losses stack up this year as cryptocurrency prices collapsed.
"Things will continue to simmer after the FTX crash," said Alan Wong, operations manager of Hong Kong Digital Asset Exchange.
"With a gap of $8 billion between liabilities and assets, when FTX is insolvent, it will trigger a domino effect, which will lead to a series of investors related to FTX going bankrupt or being forced to sell assets. In an illiquid bear market, the event will lead to a new round of cryptocurrency declines, as well as a liquidation of leverage."
SBF denies South America speculation
The exchange's dramatic fall from grace has seen its 30-year-old founder Sam Bankman-Fried, known for his shorts and T-shirt attire, morph from being the poster child of crypto's successes to the protagonist of the industry's biggest crash.
Bankman-Fried, who lives in the Bahamas, has also been the subject of speculation about his whereabouts. On Saturday he told Reuters that he was in the Bahamas, denying speculation on Twitter that he had flown by private jet to South America.
The turmoil at FTX has seen at least $1 billion of customer funds vanish from the platform, sources told Reuters on Friday. Bankman-Fried had transferred $10 billion of customer funds to his trading company, Alameda Research, the sources said.
Executives reportedly knew
FTX-affiliated crypto trading firm Alameda Research's Chief Executive Officer Caroline Ellison and senior FTX officials knew that the crypto exchange had lent Alameda its customer funds to help meet liabilities, the Wall Street Journal reported on Saturday.
Reuters reported Friday that FTX founder and former CEO Sam Bankman-Fried had secretly transferred $10 billion of customer funds from FTX to Alameda.
Ellison told employees in a video meeting on Wednesday that she, Bankman-Fried, and two other executives, Nishad Singh and Gary Wang were aware of the decision to move customer funds to Alameda, the Journal said, citing people familiar with the matter.
FTX and Alameda Research did not immediately respond to Reuters' requests for comment.
