‘Substantial amount’ of FTX assets stolen or missing – bankruptcy attorney
James Bromley, a partner at the law firm Sullivan & Cromwell representing debtors in FTX’s bankruptcy case in the District of Delaware, said the firm’s assets continued to be at risk from cyberattacks.
In a livestream of FTX Trading’s November 22 bankruptcy proceedings, Bromley said FTX’s new CEO, John Ray, had outlined key objections aimed at steering the company, remaining employees and funds through the controversial and public collapse. According to FTX’s co-adviser, a core group of employees continued to work at the exchange to ensure assets were secure and records were maintained, but hackers posed a threat since November 11, when the company filed for Chapter 11.
“We’re not just talking about crypto assets, cash assets, or physical assets — we’re also talking about information, and information here is an asset,” Bromley said. “Unfortunately […] a significant amount of assets has been stolen or has gone missing. We are experiencing cyberattacks, both on the date of the petition and in the days that follow, and we have, as I mentioned earlier, engaged sophisticated expertise to protect ourselves against hacks, but they continue.
The lawyer said that FTX had used several forensic, cybersecurity and blockchain companies in the proceedings, including Chainalysis – the company has already provided relevant information to crypto-related law enforcement cases by US government agencies. Bromley added that another cybersecurity firm was involved in the case, but said he would not release his identity because hackers could benefit from this information.
An unknown actor has already withdrawn 228,523 Ether (ETH) of FTX amid the exchange’s collapse and bankruptcy, later convert part of the funds in Bitcoin (BTC). As of November 21, the perpetrator had moved about $200 million in ETH to 12 different wallet addresses.
Reorganization at the management level was also a priority objective for FTX under Ray, who criticized former CEO Sam Bankman-Fried public comments on the debacle. Bromley added that under Bankman-Fried, the exchange had been “under the control of a small group of inexperienced and unsophisticated individuals”, some or all of whom may have been compromised.
“Along with the run on the bank, there was a crisis of leadership [at FTX]. The FTX companies were controlled by a very small group of people led by Sam Bankman-Fried. During the bank run, Mr. Bankman-Fried’s leadership frayed, leading to resignations across the ranks.
The live-streamed hearing was the first publicly available since FTX Group bankruptcy filing on November 11, but new information about the company’s collapse continues to emerge through court documents and the media. Bankman-Fried, his family members and other senior FTX executives allegedly bought several properties in the Bahamas worth more than $121 million. Bromley told the court that an entity associated with Alameda Research purchased about $300 million worth of real estate in the island nation, but did not explicitly name the former FTX CEO.