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FTX hacked? FTX.com withdrawals suspended after $500m of user funds drained by unknown party

By Peter Henn

15:28, 14 November 2022

Hands on a laptop
Has FTX been hacked? – Photo: Shutterstock

More trouble has hit the beleaguered FTX (FTT) crypto exchange after the revelation that nearly $500m worth of crypto was taken from it led to concerns that it had been hacked.

A tough time

The news came over the weekend, not long after it was announced that the platform, alongside its American subsidiary FTX US and Alameda Research, an investment company set up by FTX’s founder, disgraced former billionaire Sam Bankman-Fried, had applied for Chapter 11 bankruptcy at an American court. 

The problems started on Saturday 12 November – the day after it had filed for bankruptcy. 

Company lawyer Ryne Miller said that, while the exchange had already started moving its digital assets into an offline “cold storage” facility, the process had been sped up in order to, as he put it on Twitter “mitigate damage upon observing unauthorised transactions”.

Where was the money taken?

A report by blockchain analysis company Elliptic suggested that around $278m previously on the (ETH) blockchain and $106m from the under-fire solana (SOL) blockchain had been taken, with the remainder of the $477m shortfall coming in other tokens and coins on other blockchains. 

Elliptic pointed out that the news was announced via FTX’s Telegram channel in a message that said: “FTX has been hacked. All funds seem to have gone. FTZ apps are malware. Delete them. Don’t go on FTX site as it might download trojans.”

The company’s research also suggested that, as Miller had already said, around $186m worth of crypto had been taken offline by the exchange.

The issue has been clouded somewhat by reports that Bankman-Fried had installed a kind of exploit, or backdoor, which had allowed him to secretly transfer funds, allegedly belonging to FTX customers, between FTX and Alameda – claims which the man known in crypto circles as SBF has denied. 

In a statement, also tweeted by Miller, new FTX CEO John J Ray III said: “Consistent with their obligations as Chapter 11 Debtors-in-Possession, FTX US and FTX.com continue to make every effort to secure all assets, wherever located.

BTC/USD

67,512.95 Price
-0.330% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

DOGE/USD

0.14 Price
-2.170% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

SOL/USD

179.86 Price
-2.040% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.2652

ETH/USD

3,446.11 Price
-1.560% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

“Among other things, we are in the process of removing trading and withdrawal functionality and moving as many digital assets as can be identified to a new cold wallet custodian. As widely reported, unauthorised access to certain assets has occurred.

“An active fact review and mitigation exercise was initiated immediately in response. We have been in contact with, and are coordinating with law enforcement and relevant regulators.”

The largest crypto hacks in history

If the $477m does turn out to have been stolen, it would make it the sixth-largest crypto hack of all time. 

Earlier this year, the record was broken when hackers attacked the Ronin blockchain, home of the Axie Infinity play-to-earn gaming system, stealing $600m worth of ETH and about $25m worth of the USDC stablecoin. 

That hack has been reportedly linked to a group from North Korea by American authorities. 

Prior to that, the largest crypto heist came in 2021, when Chinese platform Poly Network was hacked for $611m. 

Both the 2018 Coincheck hack, which reportedly stole around $550m worth of crypto, and the 2014 Mt Gox attack, which saw around $480m worth of crypto taken, were also larger than the FTX incident, if Elliptic’s report is accurate. 

Markets in this article

ETH/USD
Ethereum / USD
3446.11 USD
-54.49 -1.560%
SOL/USD
Solana / USD
179.8568 USD
-3.7253 -2.040%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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