According to a tweet posted by the exchange's general counsel, Ryne Miller, the CEO stated that FTX.com and FTX.us had initiated processes to move as many of their digital assets as can be identified to a new cold wallet custodian in line with their obligations as Chapter 11 Debtors-in-Possession. This is in line with the fact that both companies are currently in the process of filing for Chapter 11 bankruptcy protection.
The revelation provides further evidence that the highly publicized hack of FTX was carried out by criminals who made off with an estimated $600 million from the platform while also infecting the FTX mobile app with malware. According to Ray, FTX is cooperating with the appropriate law enforcement agencies and regulatory bodies to formulate a response to the attack.
"As has been well documented, there has been unauthorized access granted to a number of assets. In early response, a thorough investigation of the facts and a risk reduction exercise were begun. "We have been in communication with, and are collaborating with, law enforcement and relevant regulators," Ray, the restructuring specialist who oversaw the liquidation of Enron Corp., which is considered to be one of the greatest bankruptcies in the history of the world, said.
According to a scoop by Reuters, between $1 billion and $2 billion of customers' assets are not reflected for in the Alameda-related $10 billion FTX loss. This development contributes to the further deterioration of the situation at FTX, which is already quite concerning.
The investigation also alleges that Sam Bankman-Fried, the former CEO and co-founder of FTX, established an accounting backdoor in the exchange's booking system. As a result, other officials at FTX were unaware of the company's business dealings with Alameda, according to the study.
While this is going on, up to 130 of the companies that are held in FTX's portfolio are also involved in the Chapter 11 bankruptcy procedures. Hundreds of companies in which the exchange made investments and many venture capital firms that invested in its funding rounds are at risk of failing or incurring huge losses. The exchange was one of the investors in these companies.
Will the downfall of FTX bring about a beneficial change in cryptocurrency?
Because of the failure of the FTX exchange, the total capitalization of the cryptocurrency market has decreased by more than $201 billion. This is the outcome of investors withdrawing their assets from the business out of fear that other cryptocurrency startups may follow in FTX's footsteps.
By embracing the idea of proof-of-reserve and launching campaigns to allay these anxieties, some cryptocurrency exchanges have recently launched campaigns (PoR). Binance, Crypto.com, Kraken, Bitmex, Nexo, Coinfloor, HBTC, Gate.io, and Ledn are just some of the cryptocurrency exchanges that have recently revealed their proof-of-reserve for the industry to see.
Others, such as Okx, Kucoin, Bitfinex, Deribit, and Bybit, have also guaranteed that they will disclose their proof of solvency and carry out comprehensive audits within the next few weeks. A market expert by the name of Nic Carter Carter referred to the event as "another silver lining" of the FTX collapse.
