US Department of Justice Launches Investigation into FTX Hacking Incident

Federal prosecutors in the US are investigating a cybercrime that allegedly led to the theft of more than $370 million from FTX, hours after the exchange filed for bankruptcy last month.

US Justice Department Investigates FTX’s 370 Million Hacking Incidents

According to a person familiar with the case, the Justice Department has launched a criminal investigation into stolen assets, separate from the fraud case against FTX co-founder Sam Bankman-Fried.

The source in question confirmed that the US authorities managed to freeze some of the stolen funds. But the frozen assets represent only a fraction of the whole highlight.

It’s unclear whether the theft was done from within, as Bankman-Fried suggested in interviews before his arrest, or whether it was the work of an opportunistic hacker seeking to exploit the vulnerabilities of a collapsing company.

This behavior may amount to a computer fraud-related charge with a maximum sentence of 10 years in prison.

The amount stolen is far less than the billions of dollars that Bankman-Fried was accused of using improperly when he was head of FTX.

Authorities say the 30-year-old founder, who is currently on bail and lives in California, has fraudulently raised $1.8 billion from investors and used his FTX funds to make high-risk investments at hedge fund Alameda Research and cover personal expenses.

Spokespersons for the Justice Department and the Manhattan U.S. Attorney’s Office declined to comment.

FTX’s new chief executive, John J Ray III, announced on November 12 that there had been “unauthorized access” to FTX assets, the same day the company filed for bankruptcy.

A person familiar with the matter said the investigation was led by the Justice Department’s National Cryptocurrency Enforcement Team, a network of prosecutors focused on digital asset investigations. The team is working with Manhattan federal prosecutors in charge of the extensive criminal investigation that led to Bankman-Fried’s arrest this month.

Blockchain analytics firm Elliptic, in an analysis of the trajectory of stolen funds last month, found that tokens emptied from FTX wallets were sent to another via decentralized exchanges. cryptocurrency with a unit ETH He said it was exchanged with. The firm said at the time that this was “a tactic commonly seen in major hacks.”

*Not investment advice.