FTX Investigates ‘Unauthorized Transactions’ Suspected Of Fund Transfer Backdoor

According to a media report on November 12, FTX, an encrypted currency exchange that has applied for bankruptcy protection, said on the same day that millions of dollars’ worth of “”unauthorized transactions”” had been transferred from the platform. FTX is currently cooperating with the investigation and freezing of all digital assets as soon as possible to mitigate damage.

 A blockchain analytics firm said some $473 million of crypto assets were “”removed from the FTX wallet in suspicious circumstances early this morning”” but could not confirm whether the coins had been stolen. The FTX U.S. legal counsel Ryan Miller said in a tweet on the same day that the company had accelerated the transfer of all Digital Assets to cold storage to reduce losses to customers from “”unauthorized transactions.””

 According to the sources, FTX founders secretly transferred $10 billion to their trading company, Alameda Research, while at least $1 billion to $2 billion remains missing. The founders of FTX did not elaborate on the secret transfer of the $10 billion funds, claiming that it was a matter of internal labeling. However, in subsequent inspections, FTX’s legal and financial team also learned that the founders of FTX set up a “”back door”” that allowed the founders to change the company’s financial records.

 In addition, the transfer will not alarm external auditors, so the $10 billion transfer did not trigger an internal compliance and accounting red line. The SEC, the Department of Justice, and the U.S. Commodity Futures Trading Commission are investigating FTX. The scope of the SEC’s investigation includes FTX’s handling of customer funds and digital currency lending activities.

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