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Ghosting of $662 million in tokens from Sam Bankman-Fried's bankrupt digital asset exchange FTX in just 24 hours has crippled the already drowning cryptocurrency sector.
The most recent development in one of the darkest times for the cryptocurrency sector, Bloomberg reported on Saturday.
"Following the Chapter 11 bankruptcy filings - FTX US and FTX [dot] com initiated precautionary steps to move all digital assets to cold storage. Process was expedited this evening - to mitigate damage upon observing unauthorized transactions." Rayn Miller, general counsel of the company's U.S. arm, tweeted.
While customers were still coming to terms with the platform's Friday plunge into Chapter 11 proceedings were subsequently confronted with what the general counsel of its U.S. arm, Ryne Miller, described as "abnormalities with wallet movements."
Customers encountered what Ryne Miller described as "abnormalities with wallet movements" as they were still processing the platform's Friday bankruptcy proceedings.
Tether, the company that produces stablecoins, allegedly blacklisted more than $30 million of the "FTX attacker's" USDT token holdings, according to a referenced tweet by its chief technology officer, Paolo Ardoino.
The currencies streamed out of FTX's international and U.S. exchanges, according to blockchain analytics company Nansen, provided an overall estimate of $662 million in withdrawals.
The stablecoins and other tokens that were swept were quickly changed to Ether on decentralized exchanges, according to a separate investigation by Elliptic, which revealed that initial indications showed almost $475 million had been stolen from the exchange in illegal transactions.
"It's unclear exactly who's making the transactions, but you wouldn't expect to see these on-chain trades at this time," said Alex Svanevik, chief executive officer at Nansen.
Hackers occasionally employ such methods to avoid having their riches taken.
A huge blow to cryptocurrency
Twitter was flooded with complaints, allegedly from irate customers who highlighted a group Telegram chat in which members were alerted that FTX had been compromised and that some client accounts had been emptied.
The accusations were not readily verifiable, as calls made to FTX representatives outside of regular U.S. business hours went unanswered many times, according to Bloomberg.
One of the richest businesses in the cryptocurrency industry falling into ruin as a result of bankruptcy could refer to many things.
The degree of interdependence between the enterprises and whether FTX improperly handled customer funds are also under investigation by the U.S. authorities and the Exchange Commission.
According to Nansen, the incident completely depleted the FTX primary wallet of its FTT amount. The exchange's own coins are the FTT ones. The aggregate outflows from FTX eventually stopped, as per Nansen.
The events serve as a huge blow to the cryptocurrency industry, which is already suffering from a year-long downturn and the collapse of Bankman-exchange Fried's and sibling trading firm Alameda Research.
It would add to what already appears to be a record year for attacks on the digital-token market if the outflows are due to a security flaw.
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