Home CryptocurrencyAltcoin “Significant Amount” of FTX Assets Stolen or Missing — Bankruptcy Counsel

“Significant Amount” of FTX Assets Stolen or Missing — Bankruptcy Counsel

by SuperiorInvest

James Bromley, a partner at the law firm Sullivan & Cromwell representing debtors in FTX’s bankruptcy case in Delaware County, said the company’s assets remain at risk from cyber attacks.

Live coverage of the FTX Trading bankruptcy proceedings on 22 November, Bromley he said new FTX CEO John Ray III raised major objections aimed at getting the firm, remaining employees and funds through the controversial and public collapse. According to an FTX co-counsel, a core group of employees continued to work at the exchange to ensure asset safety and record keeping, but hackers are a threat since Nov. 11, when the company filed for Chapter 11.

“We’re not just talking about crypto assets, monetary assets or physical assets – we’re also talking about information, and information is an asset here,” Bromley said. “Unfortunately, […] a substantial amount of property was either stolen or missing. We are experiencing cyber attacks, both on the day of the petition and in the following days, and as I mentioned, we have used sophisticated expertise to protect against hackers, but they continue.”

The lawyer said FTX has enlisted the help of several law firms, cybersecurity and blockchain analytics firms, including Chainalysis — which previously provided relevant information to cases of cryptocurrency enforcement by United States government agencies. Bromley added that another cybersecurity firm was involved in the case, but said he would not release its identity out of concern that hackers could use the information.

An unknown actor has already removed 228,523 ethers (ETH) from FTX in the midst of stock market collapse and bankruptcy, transfer part of the funds later to bitcoin (BTC). As of November 21, the attacker had moved roughly $200 million in ETH to 12 different wallet addresses.

Related: The FTX hacker is now the 35th largest holder of ETH

Management-level reorganization was also a priority for FTX under Ray, who criticized former CEO Sam Bankman-Fried’s public comments on the debacle. Bromley added that under Bankman-Fried, the exchange was “under the control of a small group of inexperienced and unsophisticated individuals”, some or all of whom could be compromised.

“At the same time as the attack on the bank, there was a leadership crisis [at FTX]. The FTX companies were controlled by a very small group of people led by Sam Bankman-Fried. During the attack on the bank, the management of Mr. Bankman-Fried was torn apart, and this led to resignations from all ranks.’

The live hearing was the first open to the public since then Declaration of bankruptcy of FTX Group Nov. 11, but new information about the company’s failure continues to emerge through court documents and the media. Bankman-Fried, his family members and other high-ranking FTX executives allegedly they bought more properties in the Bahamas worth more than $121 million. Bromley said in court that an entity associated with Alameda Research bought roughly $300 million worth of real estate in the island nation, but did not specifically name the former FTX CEO.

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