FTX says ‘unauthorized transactions’ drained millions from the exchange

FTX moved users’ funds to offline wallets early Saturday morning after a wave of “unauthorized transactions” drained hundreds of millions of dollars from the beleaguered cryptocurrency exchange. Ryne Miller, the general counsel at FTX US, didn’t confirm a hack, but Tweeted that the company made the move to “mitigate damage” caused by the potential theft, as transferring funds offline, or to “cold storage,” helps prevents outsiders from gaining access to them.

FTX’s new CEO John Ray, who took the place of company founder Sam Bankman-Fried following his resignation on Friday, issued a statement through Miller’s Twitter accountSaturday afternoon. “We are in the process of removing trading and withdrawal functionality and moving as many digital assets as can be identified to a new cold wallet custodian,” Ray says. “As widely reported, unauthorized access to certain assets has occurred.” He adds that FTX is in contact with law enforcement and “relevant regulators” to address the situation.

“FTX has been hacked. All funds seem to be gone,” an admin on FTX’s official Telegram channel writes, while also instructing users to delete FTX’s apps and warning against going on the platform’s websites due to the presence of malware. FTX.com, FTX.us are currently offline at the time this article was written.

Some users on Twitter speculate whether a member of Bankman-Fried’s inner circle drained the exchange’s funds, with ZachXBT, crypto sleuth stating “multiple former FTX employees confirmed to me they do not recognize these transfers.” Nick Percoco, the CEO of the cryptocurrency exchange Kraken, According to the platformIt was possible to identify the account at issue, since the alleged thief used Kraken for the transfer of funds.

Last week’s Report from CoinDesk helped set off FTX’s quick and catastrophic collapse, which indicated Alameda Research relied heavily on FTT, a sister token from FTX. This led Binance CEO Changpeng “CZ” Zhao to announce that his exchange would sell off its FTT tokens, causing the coin’s value to plummet and other customers to jump ship. FTX had to struggle to make up the $8 billion loss due the influx of withdrawal request. Binance offered to purchase the firmHowever, It retracted its plans one day later, stating its “issues are beyond our control or ability to help.”

According to A report by ReutersUnaccounted for customer funds of anywhere from $1 billion to $2.5 billion are estimated. Bankman-Fried “secretly transferred” $10 billion from FTX to prop up Alameda Research. Send a message by text Reuters, Bankman-Fried denied that the funds were secretly transferred, and reportedly replied “???” when asked about the missing funds. The outlet also found that Bankman-Fried added a “backdoor” to FTX’s accounting system that reportedly allowed the founder to change the company’s financial records “without alerting other people.”

Update, 3:12PM ET: John Ray has updated the statement.