Lawyers have claimed FTX assets are either stolen or missing and now a team of financial forensic experts is attempting to trace the money trail.
The new management for bankrupt crypto exchange FTX has reportedly hired a team of financial forensic investigators to track down the billions of dollars worth of missing customer crypto.
Financial advisory company AlixPartners was chosen for the task and is led by former Securities and Exchange Commission (SEC) chief accountant, Matt Jacques, according to a Dec. 7 report from the Wall Street Journal.
It is understood that the forensics firm will be tasked with conducting “asset-tracing” to identify and recover the missing digital assets and will complement the restructing work being undertaken by FTX.
On Nov. 11 hackers drained wallets owned by FTX and FTX.US of over $450 million worth of assets.
Former CEO Sam Bankman-Fried claimed in an interview recorded on Nov. 16 with crypto blogger Tiffany Fong that he was close to finding who the hacker was and that he had “narrowed it down to eight people” believing it was “either an ex-employee or somewhere someone installed malware on an ex-employee’s computer.”
On Nov. 22, a lawyer representing FTX debtors stated that “a substantial amount of assets have either been stolen or are missing” from FTX, and revealed at the time that blockchain analytics firms such as Chainalysis had been enlisted to help as part of the proceedings.
The stolen funds from FTX have since been on the move through various crypto mixers and exchanges to launder the funds.
The hacker transferred their Ether (ETH) holdings on Nov. 20 to a new wallet address and swapped some of the ETH for an ERC-20 version of Bitcoin (BTC) afterward bridging the funds to the BTC Network.
They then used a laundering technique called peel chaining that subdivides the holdings into increasingly smaller amounts across multiple wallets and sent the BTC through a crypto mixer then to the OKX exchange on Nov. 29.
The hacker also attempted more peel chaining by splitting 180,000 ETH across 12 newly created wallets on Nov. 21.
Former CEO Sam Bankman-Fried has also previously claimed to have “unknowingly commingled” customer funds at FTX and its sister trading firm Alameda Research with customer funds at FTX loaned to Alameda.
FTX’s new CEO and chief restructuring officer, John Ray III, was scalding in his initial bankruptcy filing saying that “never” in his 40-year career had he “seen such a complete failure of corporate controls.”
He claimed Bankman-Fried and his closest colleagues are “potentially compromised” and used “software to conceal the misuse of customer funds.”