The hacker responsible for the FTX platform hack has been exposed. Apparently, the theft of millions of dollars in cryptocurrencies was orchestrated by an unexpected coalition of several individuals. We take stock of this new turnaround.
Hours after FTX went bankrupt, a mysterious hacker broke into the cryptocurrency exchange. Part of the remaining funds on the platform have been transferred to external addresses. More $470 million in digital assets disappeared within hours. FTX’s new executives have confirmed ” unauthorized transactions » performed by an unknown attacker. In response, officials migrated the tokens to cold wallets. $740 million was recovered from the fallen exchange.
Some of the stolen cryptocurrencies are reappeared on Kraken, a reputable exchange. He also claimed to have discovered the identity of the pirate. The thief would indeed have gone through a Kraken account verified through a KYC (Know your Customer) process. Subsequently, the hacker converted part of his earnings into other cryptocurrencies, including Ether. With 229,000 ETH in his pocket, he became one of the 40 largest holders of Ether of the market.
Unsurprisingly, many former FTX employees speculated Sam Bankman-Fried, or a close associate, was behind the operation. In a conversation with a Vox reporter, the former billionaire said denied being behind the transfers. Instead, he believed the attack was instigated by a former FTX employee.
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The FTX Hacker Didn’t Act Alone
Turns out the former crypto prodigy lied again. This mysterious hacker was none other than Sam Bankman-Fried himself. In an official document addressed to the American courts, John Ray, the lawyer in charge of the bankruptcy proceedings of FTX, reveals that SBF acted at the request of the Bahamian authorities, where the head office of the exchange is located. He was helped by Gary Wang, co-founder of FTX, in the operation. The lawyers handling the case claim to have credible evidence.
” The Government of the Bahamas is responsible for unauthorized access to systems for the purpose of obtaining digital assets from debtors Say FTX Bankruptcy Lawyers
The Securities Commission of the Bahamas, the body in charge of financial regulation in the Bahamas, has apparently asked the founder of FTX to withdraw funds from the platform. During the hack, Sam Bankman-Fried was indeed detained by the authorities of the archipelago in the context of an interrogation. This is also the case with Gary Wang. Under the surveillance of the authorities, the two accomplices siphoned part of the funds from the FTX empire to hand them over to the justice of the Bahamas. The duo presumably relied on a hidden backdoor in the platform’s code, ahead of the bankruptcy.
Why did the Bahamas recover part of the funds?
In an official press release, the Bahamian regulator quickly confirmed being the instigator of the hack. The organization reveals that it has only recovered funds related to FTX Digital Marketsthe Bahamian division of the FTX empire.
« The Bahamian Securities Commission […] has taken steps to direct the transfer of all digital assets of FTX Digital Markets Ltd. towards a Commission-controlled digital wallet”says the Bahamas SEC.
The financial policeman explains that he took ” urgent interim regulatory action » for “ protect the interests of customers and creditors » from FTX Digital Markets. Note that the document does not specify what amounts were intercepted by authorities under the Digital Assets and Registered Exchanges Act. This legislation, enacted in 2020 by the government of the Bahamas, aims to regulate the development ” services related to digital token exchanges ».
According to the press release, Bahamas opposes bankruptcy proceedings initiated by Sam Bankman-Fried in the United States last week. The island nation believes that FTX was not allowed to file for bankruptcy for its Bahamian subsidiary in US courts. According to Financial Constable, FTX Digital Markets ” is not a party to U.S. Chapter 11 bankruptcy proceedings”.
The Bahamian Regulator therefore refuses to recognize the bankruptcy claim of FTX Digital Markets, a company that is registered in the Bahamas, filed in a New York court. The Bahamas believes that the bankruptcy of FTX Digital Markets is within its jurisdiction. The archipelago therefore requires that it be taken care of by its services. This is why the SEC collected the funds for the entity, with the support of SBF and Gary Wang.
“Mr. Bankman-Fried, the co-founder and majority owner of All Debtors and FTX Digital Markets, appears to support efforts to broaden the scope of the proceedings in the Bahamas, to undermine Chapter 11 and transfer debtors’ assets to accounts in the Bahamas under the control of the Government of the Bahamas”current FTX executives say in Delaware courts.
It seems that the FTX debacle caused a jurisdictional war between the archipelago and the United States. For the time being, it is not known why the Bahamas waited more than five days before revealing the truth, when heavy suspicions were already weighing on its involvement in the hack. Regardless, the Bahamian Financial Regulator has pledged to work with ” other regulators and authorities, in multiple jurisdictions, to address issues affecting creditors, customers and stakeholders » of FTX Digital Markets globally.
Securities Commission of The Bahamas