Half a billion dollars mysteriously disappears from collapsed crypto exchange FTX

Leading crypto exchange Binance announced on 8 November that it intends to acquire rival FTX (Getty Images)
Leading crypto exchange Binance announced on 8 November that it intends to acquire rival FTX (Getty Images)

Nearly half a billion dollars has mysteriously disappeared from the collapsed crypto exchange FTX, the company has said.

FTX, which filed for bankruptcy on Friday, blamed “unauthorised transactions” for the missing cryptocurrency, suggesting the funds were either stolen or hacked.

The company said it had moved its remaining reserves into offline wallets, known as cold storage, in order to protect them.

The embattled company’s new chief executive John Ray, who took over from company founder Sam Bankman-Fried, said on Saturday that FTX wasswitching off the ability to trade or withdraw funds.

FTX’s general counsel Ryne Miller also said that the firm is coordinating with law enforcement and regulators.

The exact amount of missing cryptocurrency is unclear, but analytics firm Elliptic estimated Saturday that $477 million was missing from the exchange.

Another $186 million was moved out of FTX’s accounts, but that may have been FTX moving assets to storage, said Elliptic’s co-founder and chief scientist Tom Robinson.

A debate formed on social media about whether the exchange was hacked or a company insider had stolen funds, a possibility that cryptocurrency analysts could not rule out.

Until recently, FTX was one of the world’s largest cryptocurrency exchanges. It was already short billions of dollars when it sought bankruptcy protection, after a rescue deal from rival exchange Binance fell through.

The company had valued its assets between $10 billion to $50 billion, and listed more than 130 affiliated companies around the world, according to its bankruptcy filing.

The unraveling of the once-giant exchange is sending shockwaves through the industry, with companies that backed FTX writing down investments and the prices of bitcoin and other digital currencies falling. Politicians and regulators are calling for stricter oversight of the unwieldy industry. Experts say the saga is still unfolding.

“We’ll have to wait and see what the fallout is, but I think we are going to see more dominoes falling and an awful lot of people stand to lose their money and their savings,” said Frances Coppola, an independent financial and economic commentator. “And that is just tragic, really.”

The price of bitcoin is currently trading at around its lowest point in two years, having seen its value plummet in the wake of FTX’s collapse.

The broader cryptocurrency market is down roughly $200 billion over the last week.

Additional reporting from agencies.