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FTX says it is eliminating trading and withdrawals, moving digital assets to cold wallets after a suspicious $477 million hack


In this illustration, the FTX website is seen on a computer on November 10, 2022 in Atlanta, Georgia. Binance, the world’s largest cryptocurrency company, has agreed to acquire FTX, another major crypto exchange, in a rush sale aimed at preventing a liquidity crunch, dubbed “Lehman Moment.” in the cryptocurrency industry.

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John Ray, FTX’s New CEO and Head of Restructuring, said that the bankrupt crypto exchange is “in the process of removing the trading and withdrawal functionality” and that it is “moving many the most digital asset can be identified for a new cold wallet custodian”. according to a statement tweeted by the company’s general counsel, Ryne Miller.

Notification is given when the exchange fails investigating so-called “unauthorized transactions” start within hours of FTX file for Chapter 11 bankruptcy protection in the United States

The suspected attack was reported by an administrator on the FTX Telegram Channel, according to blockchain analytics firm Elliptic followed by a tweet from Miller indicating that the wallet movement was unusual.

Figures from Singapore-based analytics firm Nansen released overnight show over $2 billion in net withdrawals from global exchange FTX and its US branch over the past seven days, of which $659 million occurred in the previous 24 hours.

Elliptic noticed that $663 million in various tokens was withdrawn from FTX’s crypto wallet. Of that amount, $477 million was taken in the suspected theft, while the rest is believed to have been moved by FTX into secure storage.

Elliptic finds that stablecoins and other tokens are being rapidly converted to ether and persistent on decentralized exchanges, a technique the company says is often used by hackers to prevent the seizure of their goods.

“The way these assets are moved is very questionable,” said Tom Robinson, Elliptic’s chief scientist. “Very similar transaction patterns have occurred with large-scale thefts in the past — whereby stolen assets are quickly swapped at decentralized exchanges, to avoid forfeiture. collect.”

The new director of FTX said the exchange is working with law enforcement and relevant regulators on the breach and that they are making “every effort” to secure all assets on the platform. Global.

Miller, FTX’s general counsel, said the decision to push digital assets into cold storage was intended to “minimize the damage of observing unauthorized transactions.”

Those who choose to hold their own cryptocurrency can store it “hot”, “cold”, or some combination of the two. Hot wallets are connected to the internet and give owners relatively easy access to their funds so that they can access and spend their cryptocurrency, while cold storage usually refers to crypto-currencies. stored on a wallet with a private key that is not connected to the internet. The trade-off of convenience with hot storage carries the risk of exposure to bad actors.

CNBC’s Rohan Goswami contributed to this report.

Filing FTX Bankruptcy

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