FTX Fraud: DOJ Launches Investigation into Major Cryptocurrency Heist

The US Department of Justice (DOJ), according to recent reports, is looking into the disappearance of nearly $372 million in missing digital assets from the cryptocurrency exchange FTX.

The FTX exploit’s specifics

FTX alerted consumers to unusual wallet activity on Nov. 12 in the midst of its bankruptcy and internal breakdown regarding at least 228,523 Ether transferred out of the exchange from an unidentified offender. The transfers were unlawful, according to FTX US general counsel Ryne Miller, who also verified that the subsidiary exchange had shifted all cryptocurrency to cold wallets as a precaution on November 11—the day the company filed for bankruptcy. A report that was released on Nov. 20 by blockchain forensics company Elliptic, the $477 million in unlawful transfers were made by an unidentified culprit who then exchanged the stolen ether for RenBTC before bridging it to bitcoin using the RenBridge service. Ren has been accused by Elliptic of “laundering hundreds of millions of dollars in cryptocurrency.” Ren was acquired by FTX-affiliated hedge fund Alameda Research in 2021.

A bug in FTX’s trading software was the subject of the exploit, which gave a hacker the ability to alter the value of particular cryptocurrencies and conduct illicit transactions. A significant sum of cryptocurrency was stolen as a result of the hacker being able to exploit this weakness for a number of hours before being discovered. Former FTX founder Sam Bankman-Fried said that either a former employee of FTX or someone with illegal access to a former employee’s computer was to blame for the incident. “I’ve narrowed it down to like eight people. I don’t know which one it was,” he admitted during a conversation with Tiffany Fong, a citizen journalist.

ZachXBT, a crypto analyst, claimed that a portion of the stolen money was sent to the Singapore-based exchange OKX via a Bitcoin mixer in the issue’s final known update on November 29. The managing director of OKX, Lennix Lai, reacted, saying, “#OKX is aware of the situation, and the team is investigating the wallet flow.”

The Department of Justice’s function in Cybercrime Investigations

The DOJ is in charge of looking into and prosecuting all federal offenses, including cyber crimes like the FTX exploit. According to Bloomberg on Tuesday, the DOJ has opened a criminal investigation into the alleged $372 million cybercrime that occurred hours after the cryptocurrency exchange declared bankruptcy on November 11. (Dec. 27).

According to the report, U.S. authorities are now following both the hacker and the remaining cash after being able to freeze a tiny portion of the assets with the aid of platforms that cooperated with law enforcement.

However, the outcome of the case is probably going to be significantly influenced by the DOJ’s probe. Exchanges and other participants in the bitcoin community must continue to work to strengthen security and counter potential vulnerabilities in the future.