The Department of Justice has launched a criminal investigation into the disappearance of $372 million from FTX CEO Sam Bankman-Fried that took place hours after the exchange filed for bankruptcy. The funds vanished from the crypto company and federal authorities are considering these vanished funds as a separate criminal investigation apart from the ongoing investigation on former CEO Sam Bankman-Fried (SBF) and other senior executives.
A person familiar with the matter told Bloomberg that US authorities have managed to freeze some of these hacked funds that were stolen after FTX filed for bankruptcy. The source, who asked not be identified as the probe is still ongoing, told the outlet that a small fraction of the funds have been frozen, as of now as some of the platforms had cooperated with law enforcement.
It is still unclear whether the hack was an inside job, as suggested by SBF in an interview before he was arrested or was done by a hacker who took advantage of the opportunity to exploit a vulnerable company. The hacker could be charged with computer fraud which carries a maximum prison term of 10 years,
Although its is a huge amount, the amount stolen by the hacker is not much when compared with the amount that was stolen by SBF and his senior executives. Authorities have said that SBF raised $1.8 billion from investors.
SBF, the 30-year old founder, with or without his senior executives, used these FTX funds to place high risk bets at hedge fund Alameda Research and for company expenses.
According to Bloomberg, last month blockchain analytics firm Elliptic analyzed the path of the stolen funds. Its report stated that the tokens that were drained from FTX wallets were swapped for ETH–ethereum, which is another crypto currency; using decentralized exchanges. The firm said that this tactic is commonly used during large hacks.
On November 20, Chainalysis had posted on Twitter that the funds stolen from FTX were on “the move.” The firm reported that the cryptocurrency was bridged from ETH to Bitcoin. It asked exchanges to be on the lookout for possible cashout by the hacker. Fans of crypto are watching for more news.
The outlet also reported that ZackXET, who is a Twitter user who tracks crypto hacks, said that some of the stolen funds had been put in a mixer. The user explained that as its name suggests a mixer mixes different cryptocurrency making it difficult to find its origins.
Bloomberg contacted the spokespersons for the Department of Justice as well as the Manhattan US attorney’s office, which will prosecute the case, but they declined to comment.
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FTX and Alameda File Request to Freeze $450 Million in Robinhood Stock in New York Court
