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Hours after crypto exchange FTX and hedge fund Alameda Research filed for bankruptcy on November 11, a large amount of money was removed from the exchanges. Both companies are owned by Sam Bankmund Freed (SBF) and faced multiple frauds until they filed for bankruptcy.
More than a month later, the US Department of Justice (DOJ) has launched an investigation into $372 million that disappeared from FTX, Bloomberg reported, citing sources familiar with the matter. The DOJ investigation is separate from the fraud case against SBF, according to the report.
U.S. prosecutors have successfully frozen some of the stolen assets, but that’s only a small fraction of the total movement of the attack, the report notes.
It remains unclear whether the FTX hack was the work of an insider or an opportunistic hacker. If caught, hackers could face up to 10 years in prison for computer fraud, according to reports.
The DOJ’s National Cryptocurrency Enforcement Team, a prosecution group focused on cryptocurrency investigations, is leading an investigation into FTX’s underfunding, according to the report. The team is working with Manhattan federal prosecutors leading a criminal case against disgraced former cryptocurrency mogul SBF.
In the aftermath of the attack, FTX US General Counsel Ryne Miller said: murmured On Nov. 12, he said he was investigating “anomalies in wallet movements.”on the same day he murmured FTX.US and FTX.com have moved all of their assets to cold wallets as a precautionary measure after filing for bankruptcy. He said it was done quickly.
Reuters report On November 12th, it was revealed that SBF had built a “backdoor” into FTX’s accounting software. The report claims that this backdoor allowed SBF to move billions of dollars without alerting staff or auditors. At the time, he was missing $2 billion in assets from an estimated $1 billion.
While the crypto world speculated that the FTX exploit was the work of an insider, Kraken Exchange Chief Security Officer Nick Percoco tweeted that he knew the identity of the attacker.
A November 17th court filing revealed that the Bahamas Securities Commission (SCB) ordered FTX to transfer assets to a regulator-controlled wallet on November 12th.
On November 20th, FTX admitted to the hack. Tweet It called on exchanges to take steps to secure funds that were transferred “without permission.”Same day, Chainalysis clarified The report that the stolen funds were being sent to SCB was incorrect. The blockchain analysis firm added that some funds were sent to regulators and others were stolen.
Meanwhile, FTX abusers continued to move tokens through various chains via bridges to exchange stolen assets through decentralized exchanges. On Nov. 15, after several swaps, the hacker emerged as his 35th largest holder of Ethereum (ETH), with 228,523 ETH worth $284.82 million at the time.
It is worth noting that SBF has been charged with misappropriating billions of dollars in user funds, well over the $372 million stolen in the attack. The disgraced former CEO has been released on bail and is awaiting trial in the Southern District Court in New York.
The judge in charge of the SBF case resigned on Nov. 23, citing her husband’s law firm’s ties to FTX. The case is now being handled by Judge Louis Kaplan, appointed by Bill Clinton.
