FTX users may be cashing of bankrupt crypto exchange through a Bahamas loophole

Sam Bankman-Fried, CEO of crypto exchange FTX, at the Bitcoin 2021 Conference in Miami, Florida on June 5, 2021.

Eva Marie Uscategui | Bloomberg | Bloomberg | Getty Images

It seems that some FTX users have found a way to move funds from exchanges through the Bahamian backdoor.

An analysis by data firm Argus found unusual trading patterns over the past five days as FTX gated customer withdrawals. Most of the irregularities involved digital collections. known as NFTsAccording to Argus, these patterns suggest that “desperate” customers were turning to FTX users in the Bahamas for help.

The now bankrupt global cryptocurrency exchange is only allowing withdrawals in the Bahamas after halting FTX liquidations anywhere in the world. The former $32 billion company, partly based in Nassau, said: Tweet He said the withdrawal of the Bahamas should be facilitated to comply with local regulations.

Wealthy users are paying astronomical prices for NFTs on FTX, while the broader cryptocurrency and digital collectibles market is plummeting. In one case, a collectible that traded for nearly $9 three weeks ago sold for $10 million on Friday. Another of his NFTs, which sold for a similar price a month ago, sold for $888,888.88 this week.

“If the overall NFT market is declining in both value and volume, in this particular case, if trading on other FTX markets is restricted, this NFT activity is highly erratic at a macro level. Argus, a blockchain analytics firm specializing in insider trading.

According to Argus, this type of transaction is likely an attempt by FTX users to access their money in all manner of ways. According to Rappaport, one possibility he has is that traders have a deal to pay Bahamas users a portion of their assets and receive them in the event of a successful withdrawal from FTX.

Elsewhere, trading volumes for non-fungible tokens have fallen by 97% from all-time highs, according to data from Dune Analytics.the price of Bitcoin It’s down 75% from its peak a year ago.

These transactions can be viewed on the blockchain, which acts as a public ledger for tracking money movements. Anyone can see your money movements, but your identity remains anonymous. Argus was unable to identify who these customers were and FTX appears to have stopped trading irregularly on Friday. There are still “bids” or offers to purchase these current expensive collectibles, but no purchase orders have been executed since then.

FTX and its founder Sam Bankman-Fried did not immediately respond to CNBC’s request for comment.

Some Twitter users have pointed out similar abuses this week. A popular crypto podcast host named Cobie was one of the first to suggest that users were buying her NFTs put up for sale by users in the Bahamas. He pointed to a wallet from FTX where he withdrew $21 million worth of cryptocurrency Tether and sent it to an address believed to be in the Bahamas.

Tweet: https://twitter.com/cobie/status/1590974648552148992

FTX reportedly saw a mysterious leak after filing for bankruptcy protection.Reuters report Between $1 billion and $2 billion in customer funds have “disappeared” from the exchange, citing two people familiar with the matter.Meanwhile, data company Elliptic Estimate That $473 million was moved out of FTX due to alleged hacking.

The company filed for Chapter 11 bankruptcy protection a week later on Friday. confusionThe exchange, run by 30-year-old Sam Bankman-Fried, has been accused of misusing customer funds and was on the verge of being acquired by its biggest rival after a liquidity crisis.

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