Sam Bankman-Fried suspects a former employee caused FTX’s loss of over $650 million 

Adeniyi Odukoya
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Embattled cryptocurrency exchange FTX revealed that it accumulated a loss of over $650 million in a few hours after filing for bankruptcy. 

In an exclusive interview with Tiffany Fong on Thursday, former CEO Sam Bankman-Fried revealed that he suspects the hacker might be one of FTX’s former employees. He stated that;

“I’ve narrowed it down to like eight people. I don’t know which one it was,” he said, suggesting that it was either a former employee or someone who installed malware on a former employee’s computer. 

Sam Bankman-Fried suspects a former employee caused FTX's loss of over $650 million 

As far as how the exchange ended up in the mess it currently finds itself in, Bankman-Fried, also known as “SBF,” told Fang that the collapse of his exchange’s token FTT led to the downtrend, not because of any margin calls directly, but because of a massive sell-off driven by fear.

Read Also: Kraken provides support for exiting employees as it lays off 1100 staff members

Faced with a liquidity crisis and forced to admit that the exchange did not hold direct reserves of client funds, FTX froze withdrawals for all customers on November 9. The next day, FTX announced that Bahamian “regulators” ordered it to enable withdrawals for its citizens. 

The Bahamian SEC later denied that regulators ever made such a demand. In reality, SBF told Fong he prioritised Bahamian withdrawals because “that’s where I am right now.”

Before losing access to FTX’s systems, SBF said firmly that he was trying hard to discover who transferred the hundreds of millions of dollars from FTX’s accounts without company approval. He said;

“I don’t know exactly who because they shut off access to the systems when I was halfway through exploring it.”

Sam Bankman-Fried suspects a former employee caused FTX's loss of over $650 million 

FTX had suggested to the judge in charge of its bankruptcy case to allow it to employ BitGo to oversee and guard its assets while the bankruptcy proceedings are going on. This is to make sure that the company’s assets are guarded against the coy of hackers.

Why FTX prioritised processing withdrawals of Bahamian users

Sam included that the exchange’s meltdown was provoked by a massive sell-off of its FTT token, which was majorly caused by fear. SBF added that they prioritised withdrawals for its users in the Bahamas since it is the country the crypto exchange was fully integrated. He said;

Read also: FTX begins payments for staff and vendors after weeks of doubt

“It was critical to the exchange being able to have a future. You do not want to be in a country with a lot of angry people in it. The pathway forward for FTX involved Bahamians not being pissed at it,”

Sam Bankman-Fried suspects a former employee caused FTX's loss of over $650 million 
FTX files for Chapter 11 Bankruptcy in the US

Nonetheless, SBF acknowledged that processing withdrawals for customers in the Bahamas and not other locations were not the best of all move. It was not a move on the side of cryptocurrency exchange. SBF said it was a “shitty” move, even though it appears he preferred users in his home nation for what looks to be his safety and his failing company’s “future.”

The former FTX CEO repelled any further accusations that he created a back door into FTX’s system and gave full room to the hacker to move whopping funds out of the cryptocurrency exchange system.

SBF denied the allegation and said that he was not an accomplice to the hacker that moved $10 billion to sister company Alameda Research. Bankman-Fried founded the crypto trading firm Alameda in 2019 but officially stepped away from day-to-day operations in 2021. He concluded;

“I do not even know how to code. I literally never opened the codebase for any of FTX.”


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