Instead of its fortunes improving, bankrupt crypto exchange FTX found itself the target of a hacking attack wherein over $600 million was taken from crypto wallets running on its system late on Friday, November 11. Ironically, the money was drained from the exchange within hours of its filing for Chapter 11 bankruptcy.
FTX officials quickly released a statement through its official channel on messaging platform Telegram, advising users of the incident, asking them not to install any updates and to delete or uninstall all FTX applications from their devices.
The tersely worded advisory told users that FTX apps were transformed into malware by hackers and, by all means, no one was to go on the exchange’s website as it could download Trojans into their personal devices. FTX General Counsel Ryne Miller pinned the advisory to the top of the Telegram chat group for quick reference.
Several hours after the Telegram advisory went online, Miller went on Twitter to announce that FTX US and FTX.com were in the process of moving all of their digital assets to cold storage following the Chapter 11 filing. Indeed, he added that the process was essentially fast-tracked to prevent further damage due to several unauthorized transactions.
The aforementioned transactions are said to have been done on the same day that FTX filed for bankruptcy protection in the United States following the misappropriation of billions of dollars in user funds. This prompted rumors on various online channels that it was possible that the hack was done by an FTX insider instead of a malicious party from outside the organization.
A number of those active in the cryptocurrency community expressed their suspicions that the sudden outflow of assets may have been orchestrated by someone in cahoots with FTX’s disgraced CEO and founder, Sam Bankman-Fried. The speculations were fueled by how the hacks on FTX.com and FTX US were synchronized. Indeed, as of midnight EST, the exchange’s login portal was unavailable, and a 503 error was encountered by those who tried to log in.
In the hours following the Chapter 11 filing, numerous FTW wallet holders reported that their balances on FTX.com and FTX US were down to zero. At first, this was attributed to technical issues affecting the FTX API.
However, following these incidents, several tokens, including Ethereum, Solana, and Binance Smart Chain, left FTX’s official wallets and shifted to 1inch and other decentralized exchanges. The exodus has adversely impacted both FTX.com and FTX US.