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Potential Russian Involvement in FTX Hack: Insights from Elliptic

Oct 14, 2023 at 10:26 am

In a recent revelation, Elliptic, a leading research company, has suggested a potential link between a portion of the approximately $400 million stolen in the November hack of the now-defunct FTX cryptocurrency exchange and cybercriminal groups based in Russia. This discovery sheds light on the intricate web surrounding the breach and raises questions about the identity of the perpetrators.

The majority of the pilfered assets, primarily consisting of ether (ETH), remained inactive for an intriguing five-day period. It was during this time that approximately 65,000 ETH, equivalent to $100 million, found its way onto the Bitcoin blockchain through the RenBridge service. Subsequently, the culprits employed a mixer, a sophisticated blockchain tool designed to obscure transaction addresses, further complicating the tracking process.

According to Elliptic's analysis, a substantial portion of the 4,536 Bitcoins converted from ether at RenBridge, specifically 2,849 BTC, underwent mixing, primarily through a service known as ChipMixer. While the tracking of these assets becomes inherently more challenging, it is estimated that at least $4 million was directed towards exchanges, potentially for conversion into fiat currency.

Following the shutdown and seizure of ChipMixer in a coordinated international law enforcement operation, the attackers swiftly shifted their operations to Sinbad, a new mixing service, demonstrating their adaptability and agility in evading capture.

While the identities of the perpetrators remain enigmatic, Elliptic is actively examining wallet data and meticulously tracking fund movements. These efforts may offer crucial insights into the individuals or groups responsible for this audacious breach.

Who hacked FTX?

Elliptic has considered a range of potential suspects, from rogue employees at FTX to the North Korean hacking collective Lazarus, known for exploiting various cryptocurrency protocols. However, on-chain evidence leans towards Russian groups, suggesting a potentially stronger connection.

The involvement of an actor associated with Russia appears increasingly likely. Elliptic's analysis indicates that a significant portion of the stolen assets, traceable through ChipMixer, were amalgamated with funds from Russia-linked criminal factions, including ransomware groups and darknet markets, before being directed towards exchanges. This points to the potential involvement of a broker or intermediary with ties to Russia.

The incident unfolded on November 11, 2022, when accounts linked to FTX and FTX US were emptied. This occurred shortly after the company filed for bankruptcy, and its founder, Sam Bankman-Fried, relinquished his position at the helm of the cryptocurrency empire he oversaw. Bankman-Fried was subsequently indicted on counts of wire fraud and conspiracy to commit various forms of fraud.

John J. Ray III, the CEO and Chief Restructuring Officer of the FTX Debtors, revealed that $323 million in various tokens were stolen from the international exchange, along with $90 million from its U.S. platform. The stolen assets, which remained untouched until shortly before Bankman-Fried's trial, have been on the move. Recently, over 15,000 ether, valued at nearly $25 million, were exchanged for alternative tokens using privacy-focused platforms.

The FTX exchange hack, with its intricate web of movements and potential links to Russian cybercriminal groups, continues to be a subject of intense scrutiny. As Elliptic unravels further details, the cryptocurrency community eagerly awaits more clarity on this audacious breach and the individuals or groups behind it.

Read more: Cryptic Moves: FTX Hack Saga

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