The FTX cryptocurrency exchange debacle continues to shake the crypto space.
Players are trying to figure out where the contagion will reach next because FTX and its founder, Sam Bankman-Fried, were central players in the industry. The company filed for bankruptcy on Nov. 11 after running out of cash to meet the demands of its customers and investors.
In recent court documents, FTX said that 50 of its top creditors are claiming more than $3 billion from it. The exchange owes about $1.45 billion to its top 10 creditors, according to a Nov. 19 filing with the U.S. Bankruptcy Court for the District of Delaware.
None of the creditors was named, but the largest claim is $226 million, followed by $203 million and $174 million. The fourth and fifth claims were $159 million and $130 million.
Hacker(s) Are Transferring Funds
New CEO John Ray, in charge of restructuring, has also announced the start of a strategic review of the assets, intended to liquidate them.
While waiting to see what other cryptocurrency companies are affected by FTX's collapse, players on Nov. 21 were focused on the movement of stolen funds from FTX the day it filed for bankruptcy.
Indeed, nearly $663 million had been drained from FTX on Nov. 11, according to blockchain security firms. The company had confirmed the theft but never provided the amount.
Part of this money had been invested in ether, the second largest cryptocurrency in terms of market value. The FTX hacker(s) had thus become among the largest holders of ether.
The funds are on the move again and are now going into bitcoin, according to security firm Chainalysis. This means that the hacker or hackers are investing in bitcoin.
"Funds stolen from FTX are on the move and exchanges should be on high alert to freeze them if the hacker attempts to cash out," Chainalysis warned on Nov. 20. "Reports that the funds stolen from FTX were actually sent to the Securities Commission of The Bahamas are incorrect. Some funds were stolen, and other funds were sent to the regulators."
The firm said that the hacker(s) are probably looking to cash out now that they have a mix of ether and bitcoin.
"Funds were bridged from ETH to BTC, likely to be mixed prior to a cash out attempt. You can see this morning’s movements in Reactor," the security firm said, displaying a diagram of the movements of the funds.
"We are in touch with our partners across the ecosystem as we work to help secure as many assets as possible to return to depositors."
Blockchain technology enables everyone, and more particularly crypto-security firms, to see every transaction and every movement because these are recorded in a kind of large public ledger. It's impossible, however, to know who is behind each transaction because the identities are replaced by series of data.
CEO Ray warned cryptocurrency exchanges that funds from the platform had been illegally transferred on Nov. 11. Basically if they let the person or persons or entities who stole those funds cash out, they will be held responsible.
"Exchanges should be aware that certain funds transferred from FTX Global and related debtors without authorization on 11/11/22 are being transferred to them through intermediate wallets," Ray said in a statement.
He continued: "Exchanges should take all measures to secure these funds to be returned to the bankruptcy estate."
Tracking stolen funds from FTX and transferring them from ether to bitcoin was driving down the cryptocurrency market.
Bitcoin was down 3.4% to $15,986.02 in the past 24 hours, while Ether fell 6.3% to $1,101.78, according to data from CoinGecko.
The crypto market overall was down 4.1% to $824 billion.
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