More than $372 million was lost shortly before the bankruptcy of FTX, and the Department of Justice is attempting to figure out who took it and where it is.
- The collapse of FTX, which began in early November, came to a climax this past week with the charging of FTX and Alameda founders Sam Bankman-Fried (SBF), Gary Wang, and Caroline Ellison.
- The upcoming trial for Sam Bankman-Fried is expected in late 2023, while many more charges are expected to be filed in the coming months for other leading employees.
- There are still mysteries that need to be resolved—like the $372 million that went missing shortly after the company declared bankruptcy.
- The Department of Justice’s National Cryptocurrency Enforcement Team is working with federal prosecutors to determine the identity of the unknown individual or group that pulled the money shortly before the company’s bankruptcy.
Why it’s Important
It remains unclear what happened to the money, whether it was stolen in a hack or siphoned internally.
SBF has maintained that the funds were lost in an “inside job.” He did confirm separately that some money was drawn from the Bahamas from FTX after withdrawals were frozen; however, this may have been client funds or money that the owners were personally pulling out of the exchange. FTX’s new chief executive John J Ray III revealed on November 12 that there had been unauthorized access to funds.
“U.S. authorities have managed to freeze some of the stolen funds. However, the frozen assets only represent a fraction of the entire loot,” says Bloomberg.
“In an analysis of the stolen funds’ path last month, blockchain analytics firm Elliptic stated the tokens drained from FTX wallets were swapped for Ethereum, another cryptocurrency, through decentralized exchanges. That was a tactic commonly seen in large hacks, the firm said at the time.”
As we previously reported, the discovery of the money may not help relieve those affected by the collapse of FTX. Ray spoke before the House Financial Services Committee on December 13 and said FTX users are unlikely to see compensation due to the loss of funds. Millions of users—including celebrity spokesmen like Tom Brady and Kevin O’Leary—are expected to lose millions of dollars of personal wealth.