REPORT: DOJ Investigating How Hacker Allegedly Stole Over $370 Million Hours After FTX Declared Bankruptcy

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James Lynch Contributor
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Department of Justice (DOJ) prosecutors launched a criminal probe into an alleged hack that siphoned over $370 million in assets from FTX hours after the exchange’s Nov. 11 bankruptcy filing.

A source familiar with the case told Bloomberg that authorities managed to freeze some of the stolen assets. These assets had been laundered into crypto tokens Ether and Bitcoin after the hack, CNBC reported.

FTX CEO John J. Ray III said in a Nov. 12 statement that “unauthorized access to certain assets ha[d] occurred.” The company would coordinate with regulators, according to FTX General Counsel Ryne Miller. Multiple FTX employees reportedly told crypto sleuth ZachXBT they did not recognize the alleged hacker’s $383 million in FTX transfers.

The alleged hacker reportedly used a verified personal account on the crypto exchange Kraken to convert the stolen funds to a crypto “stablecoin” that tracks U.S. dollars, according to crypto site CoinDesk. (RELATED: REPORT: Sam Bankman-Fried Had Deep Ties To Current, Former Regulators, Emails Show)

Kraken’s anti-money laundering verification steps have led blockchain experts to speculate an insider was behind the hack, CoinDesk added. Kraken Chief Security Officer Nick Percoco said the company “know[s] the identity of the user” in a Nov. 13 tweet.

The DOJ probe is separate from the fraud case against FTX founder Sam Bankman-Fried, Bloomberg added. Federal prosecutors indicted Bankman-Fried on Dec. 13 on eight counts of fraud and conspiracy, including wire fraud, money laundering and campaign finance violations.

FTX and its U.S. operation were valued at $40 billion after a Jan. 2022 fundraising round, according to Forbes Magazine. The exchange filed for bankruptcy in the wake of mass customer withdrawals following allegations of misuse of customer funds by FTX and its sister hedge fund Alameda Research.