Bahamas Regulators Were Behind the Supposed $600M FTX Exploit

On November 12, the news went around that the troubled crypto derivative exchange FTX had suffered a $600 million hack. Others attributed it to an insider job. However, new information shows that the Securities Commission of The Bahamas (SCB) was behind the funds’ sudden movement.

SCB Seizes FTX Funds

An official statement made by the Bahamian regulatory agency revealed that the funds were seized from FTX to “protect the interests of clients or customers.”

“[. . .] Under the authority of an Order made by the Supreme Court of the Bahamas, [we] took the action of directing the transfer of all digital assets of FTX Digital Markets Ltd. to a digital wallet controlled by the Commission, for safekeeping,” the statement added.

A day before SCB seized the funds, Sam Bankman-Fried, the founder of FTX and its sister companies, noted that he had filed for Chapter 11 bankruptcy protection for FTX, FTX US, and Alameda Research. Last week, FTX Bahamas filed for Chapter 15 bankruptcy protection.

ZachXBT Debunks SCB’s Statement

Despite the statement shared by the Bahamian regulatory watchdog, a self-proclaimed crypto detective, ZachXBT, published a Twitter thread, where he debunked the claim that the SCB was the one behind the supposed hack. 

Among several reasons that were cited, ZachXBT noted that the wallet address holding the seized funds sent 3168 BNB through Binance chain to a different wallet address with the initial – 0x24. 

Zach stated that the receiving wallet has suspicious on-chain behavior. Evidence given was that the address uses “sketchy services such as a small Russian exchange” called Laslobit to facilitate some transactions. The funds were later on sent from 0x24 to an account with the crypto exchange Huobi.

The self-proclaimed crypto detective addressed other matters around the supposed FTX hack. One was against the claim that the exploit was an insider job. The other was against the claim that the wallet address holding the seized funds was trading memecoins.

FTX’s 15,000 ETH on the Move

On-chain data reveals that 15,000 ETH worth $16.8 million was moved from the wallet address holding the seized funds on Monday, trailing the movement of 50,000 ETH that occurred over the weekend.

The funds were then moved in three batches, 5,000 ETH each, through the decentralized exchange aggregator, 1inch. Several swaps were performed with the crypto assets through decentralized exchanges, Uniswap and Curve Finance.

Most of the funds were subsequently swapped for 684.6 renBTC worth over $11 million. RenBTC is termed a direct supply peg, as it is pegged to the price of Bitcoin. At the time of writing, the wallet had a balance of around 185,735 ETH worth over $200 million in its main wallet.