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FTX

FTX Dramatic Escape In 2022: How Consultants Thwarted A High-Stakes Heist

Ronaldo Marquez
by Ronaldo Marquez
1 year ago
·
Posted in FTX
Trusted Editorial content, reviewed by leading industry experts and seasoned editors. Ad Disclosure

In a shocking turn of events, cryptocurrency exchange FTX faced a double blow as it grappled with bankruptcy and a massive crypto theft that threatened to wipe out its remaining assets. 

Now, new details have emerged about the nightmarish evening when FTX’s staff and a team of consultants raced against time to prevent what could have been a 10-figure heist.

Inside The Panicky Response To FTX’s Massive Crypto Theft

According to a recent report by Wired, it all began on the evening of November 11,  2022, when FTX, already reeling from financial woes, witnessed mysterious outflows of its cryptocurrency stash. 

The company’s exhausted staff watched in horror as hundreds of millions of dollars worth of crypto were stolen in real-time, captured on the Ethereum (ETH) blockchain tracking website, Etherscan.

Related Reading: Shocking Allegations: NFT Tycoon Tied To $60 Million AnubisDAO Rug Pull

The situation seemed dire, but little did they know that the worst was coming. FTX’s leadership, under new CEO John Ray III, quickly assembled a group of more than 20 staff members, bankruptcy lawyers, advisers, and consultants for an urgent Google Meet video call. 

The participants could witness the draining of FTX wallets in real-time, but they lacked crucial information about the storage and security measures employed by the company.

With the clock ticking, FTX’s Chief Executive of subsidiary LedgerX, Zach Dexter, embarked on an alternative approach to safeguard the remaining funds. Dexter contacted digital asset trust company BitGo, which had been in talks with FTX for custody of their crypto holdings. 

Dexter requested BitGo to create immediate “cold storage” wallets—offline wallets—for the firm to transfer its remaining funds as a safe haven.

While BitGo worked on preparing the cold storage wallets, the FTX team faced a critical dilemma—where to store the vulnerable funds until the wallets were ready temporarily. 

FTX Crisis Averted

In a stroke of quick thinking, Kumanan Ramanathan, an adviser from restructuring firm Alvarez & Marsall, offered his personal Ledger Nano hardware wallet as a temporary refuge. 

Ramanathan set up a new wallet on his Ledger Nano, meticulously securing the password, and FTX’s CTO Gary Wang began transferring funds to it.

Minutes later, BitGo notified the FTX team that their wallets were prepared, prompting them to transfer hundreds of millions more in crypto to BitGo’s cold storage. 

Per the report, FTX staff frantically searched every wallet containing the company’s funds throughout the sleepless night, transferring every coin they could find to BitGo.

Meanwhile, Ramanathan possessed approximately $400 to $500 million of FTX’s crypto holdings. To protect the funds, the company’s General Counsel, Ryne Miller, rushed to Ramanathan’s office to ensure security. 

Related Reading: How AI And Money Printing Could Spark A Crypto Bull Run, According To Top Analyst

In a bizarre twist, Ramanathan even called the police to report a theft in progress and sought their assistance safeguarding the stash.

Fortunately, the physical threat never materialized, and the siphoning of funds ceased once the money was moved to Ramanathan’s Ledger wallet. 

Eventually, the funds held in Ramanathan’s office were transferred to BitGo, which ultimately secured $1.1 billion of the firm’s remaining assets.

Overall, the actions of consultants, staff, and quick-thinking decisions during that fateful night prevented a potentially catastrophic heist. 

FTX
The total crypto market capitalization kicked off the week with a drop to the $1.05 trillion mark on the daily chart. Source: TOTAL on TradingView.com

Featured image from Shutterstock, chart from TradingView.com 

Editorial Process for bitcoinist is centered on delivering thoroughly researched, accurate, and unbiased content. We uphold strict sourcing standards, and each page undergoes diligent review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance, and value of our content for our readers.
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Ronaldo Marquez

Ronaldo Marquez

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Ronaldo is a seasoned crypto enthusiast with over four years of experience in the field. He is passionate about exploring the vast and dynamic world of decentralized finance (DeFi) and its practical applications for achieving economic sovereignty. Ronaldo is constantly seeking to expand his knowledge and expertise in the DeFi space, as he believes it holds tremendous potential for transforming the traditional financial landscape.

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