The US is investigating how $372 million was hacked after FTX’s bankruptcy disappeared

Bloomberg — Federal prosecutors are investigating an alleged cyber crime that drained more than $370 million FTX Just hours after the cryptocurrency exchange filed for bankruptcy last month.

The Department of Justice has launched a criminal investigation into the stolen assets separate from the fraud case against FTX co-founder Sam Bankman-Fried, According to a person familiar with the case who asked not to be named because investigations are still ongoing. The person confirmed that the US authorities were able to freeze part of the stolen money. However, frozen assets only represent a fraction of all the loot.

It’s unclear whether the hack was an inside job, as Bankman-Fried suggested in interviews before his arrest, or the work of an opportunistic hacker eager to exploit vulnerabilities in a failing company. The behavior could amount to a computer fraud charge, which carries a maximum penalty of 10 years in prison.

The amount stolen is far less than the billions of dollars Bankman Fried is accused of embezzling while running FTX. Authorities allege that the 30-year-old founder, who is currently out on bail and resides in California, fraudulently raised $1.8 billion from investors and used FTX funds to place high-stakes bets on the Alameda Research hedge fund and to cover personal expenses.

Spokesmen for the Department of Justice and the Manhattan District Attorney’s office declined to comment.

FTX’s new CEO, John J. Ray III, revealed on November 12 that “unauthorized access” to FTX’s assets had occurred the day before, the same day the company filed for bankruptcy.

The investigation is being led by the Justice Department’s National Cryptocurrency Enforcement Team, a person familiar with the case said, a network of prosecutors focused on digital asset investigations. The team is working with Manhattan federal prosecutors responsible for the comprehensive criminal investigation that led to Fred Bankman’s arrest this month.

The amount the stranger stole from FTX was about $372 million, according to bankruptcy filings. The person confirmed that authorities were able to freeze funds on certain platforms because those outlets cooperated with law enforcement. This is not always the case, especially in the case of offshore exchanges.

In an analysis of the trajectory of stolen funds last month, blockchain analysis firm Elliptic stated that tokens drained from FTX wallets were exchanged for ETH, another cryptocurrency, via decentralized exchanges. This was a “common tactic in large hacks,” the company said at the time.

On November 20, another firm, Chainalysis, tweeted that the stolen funds were “on the move” and had been converted from ETH to Bitcoin. The group warned exchanges to watch if the hacker attempted to cash out. Some of the money was also deposited into a mixer, which mixes different types of cryptocurrency to disguise its source, according to ZachXBT, a Twitter user that tracks cryptocurrency hacks.

Read more at Bloomberg.com