Cryptocurrency Thief Attempts to Launder Stolen Millions from FTX Crash

In a daring move, a cryptocurrency thief who made off with over $470 million when the FTX cryptocurrency exchange collapsed is now attempting to launder their ill-gotten gains, just as FTX’s founder, Sam Bankman-Fried, faces a high-profile court trial. Bankman-Fried is currently on trial, facing allegations of fraud and other financial misconduct. The former crypto mogul vehemently denies these charges.

FTX, which was once among the largest cryptocurrency exchange platforms globally, faced bankruptcy on November 11, 2022, with billions of dollars in customer funds missing. On that fateful day, hundreds of millions of dollars in cryptocurrency, controlled by the exchange, were stolen by an unidentified thief who is believed to still have control over the stolen funds.

The methods employed by the thief, who remains shrouded in mystery, to obtain digital keys to FTX’s cryptocurrency wallets remain unknown. However, it is suspected that the thief might have been an insider or a skilled hacker who managed to infiltrate and steal this sensitive information. The heist began with the movement of 9,500 Ethereum coins, valued at $15.5 million, from an FTX wallet to a new wallet. Subsequently, hundreds of other cryptocurrencies were drained from FTX’s wallets, culminating in a total loss of $477 million.

According to researchers from Elliptic, a cryptocurrency investigation firm, the thief encountered significant setbacks following the theft. Over $100 million of the stolen funds were either frozen or lost in processing fees as the thief frantically shuffled the stolen cryptocurrencies to evade detection.

Despite these obstacles, around $70 million was successfully sent to a cryptocurrency mixer by December. Cryptocurrency mixers are services employed by criminals to launder Bitcoin, making it challenging to trace the source of the funds. Criminals who do not utilize mixing services to obscure the illicit origins of their Bitcoin risk being apprehended or having their funds seized by cryptocurrency exchanges that facilitate the conversion of cryptocurrencies into traditional cash.

Interestingly, approximately $230 million of the stolen FTX assets remained untouched until September 30, just before Sam Bankman-Fried’s trial commenced. Since then, millions of dollars worth of cryptocurrency have been sent to a mixer for laundering, presumably with the intention of converting it into traditional currency.

Elliptic managed to trace $54 million of Bitcoin sent to a mixer, beyond which the trail grows cold. This activity deviates from the norm observed among cryptocurrency hackers and thieves, who often wait for public attention to wane before moving and cashing out their assets. In this case, the thief has initiated the movement just as the world’s attention is once again focused on FTX and the events of November 2022.

Furthermore, an intriguing finding from the fund tracing suggests a potential link to Russian cybercrime. Some of the stolen Bitcoin that was successfully laundered last year has been traced to a wallet known to be used by Russian-linked criminal groups, indicating a possible intermediary or broker with ties to Russia’s involvement in the cryptocurrency theft.

The case highlights the evolving and complex nature of cryptocurrency-related crime, as thieves and hackers employ sophisticated methods to exploit vulnerabilities in the digital financial ecosystem. As FTX’s founder faces legal scrutiny and cryptocurrency thefts continue to challenge the security of the digital asset space, the fight against cryptocurrency-related crime remains a critical and ongoing battle.