Mysterious crooks took hundreds of millions of dollars from FTX just as it collapsed. Crypto-tracing blockchain analysis may provide an answer.
offered a strange mix of temptations and challenges for anyone trying to steal it. As digital cash, held in multibillion-dollar sums on hackable, internet-connected networks, it presents a lucrative target. But once it's stolen, the blockchains that almost every cryptocurrency is built on make it possible to follow that money's every movement and, very often, to identify the thieves.
On Friday, hours after the major cryptocurrency exchange FTX had filed for bankruptcy in the wake of its epic, 10-figure collapse, FTX's remaining funds were drained of more than $663 million worth of cryptocurrency, much of which appears to have been stolen. "FTX has been hacked," wrote an administrator in FTX's Telegram channel. "FTX apps are malware. Delete them.
That observability, for the FTX funds and for other stashes of stolen crypto, presents a serious challenge for any thief trying to cash out their haul into traditional currency.
"We’re definitely watching the movements of these funds," says Chris Janczewski, the head of investigations at TRM Labs and a former special agent at the IRS's criminal investigations division. "This potential thief has hundreds of millions of dollars. But it's like they went into a bank, took as much cash as they could carry, and then the dye packs went off. They've got all this money, but now everyone knows it's connected to this bank robbery.
According to Elliptic's analysis, at least $220 million of funds stolen in the form of a variety of cryptocurrencies were quickly traded through decentralized exchanges—trading platforms that allow users to swap coins without giving identifying information—to convert them into the cryptocurrencies Ethereum and Dai.
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