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US DoJ Starts Criminal Investigation of $370M+ FTX Hack

According to a recent report, the US Department of Justice has launched a probe of a hack that drained FTX of more than $370 million shortly after the exchange filed for bankruptcy. The investigation is led by the digital asset-focused National Cryptocurrency Enforcement Team.

Department of Justice Launches a Probe into the FTX Hack

Reportedly, the US authorities are investigating a hack that struck FTX mere hours after it filed for bankruptcy on November 11th. The Department of Justice launched a criminal probe of the attack and assigned its National Cryptocurrency Enforcement Team to the investigation.

The hack was first revealed by John J. Ray III on November 12th.  Bankruptcy filings reveal that the attacker drained more than $370 million from the exchange and an early docket submitted to the court indicated a suspicion that the Bahaman government might be behind the hack.

Some have postulated that the attack was an inside job. Additionally, multiple firms and individuals have been tracking the stolen funds as the attacker has been swapping them between various digital currencies and platforms. The investigation of the hack is to run parallel to the case against FTX’s former CEO Sam Bankman-Fried.

FTX’s Missing Funds

One of the key factors complicating the bankruptcy of FTX is the sheer amount of the company’s missing funds. Soon after taking over, the exchange’s new CEO John J. Ray III—best known for overseeing the bankruptcy of Enron—called the firm the worst “failure of corporate controls” he has seen throughout his career.

Allegedly, FTX didn’t have a proper, in-house accounting department and its record-keeping was next to non-existent. The situation with the missing assets appears to be so complicated that the exchange recently hired expert forensic investigators in an effort to locate all of its funds.

The issues with the firm’s funds are made worse by the misappropriation and misuse of assets rampant within FTX prior to its bankruptcy. Soon after the bankruptcy filing, it was reported that FTX lent billions worth of users’ assets to its sister company Alameda Research. More recently, Alameda’s CEO admitted to the judge that she and her firm loaned billions to key FTX executives and helped hide these loans from investors and customers.

This article originally appeared on The Tokenist

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