Hackers, who had stolen about $477 million worth of cryptocurrency from the crashing exchange FTX, have begun laundering that money into bitcoin.
The new CEO of FTX, John Ray, said earlier this month after the exchange declared bankruptcy that “unauthorized access to certain assets has occurred.”
Blockchain analytics firm Elliptic estimates that around $477 million in cryptocurrency was stolen from FTX.
This theft is another harsh blow to FTX, which was once among the greatest cryptocurrency empires with a massive value of $32 billion and whose collapse sent shockwaves through the cryptocurrency industry.
According to the public blockchain records linked to the hackers’ account, the stolen funds were converted into various cryptocurrencies, but the bulk of it, amounting to $280 million, was converted into the cryptocurrency ether.
Elliptic co-founder Tom Robinson told CNBC that the hackers were converting ether via the RenBridge app into a crypto product called RenBTC, which is then converted into bitcoin. This process allows the conversion of one cryptocurrency into another without going through a central exchange.
“This is a common laundering tactic in cryptocurrency thefts,” Robinson said.
Researchers at Elliptic have documented how the RenBridge app has been used to launder hundreds of millions of dollars in cryptocurrency suspected of originating from ransomware attacks or hacks. According to Elliptic, some of these hacks have links to Russian-backed ransomware groups.
On November 11, FTX users noticed unusual cryptocurrency transfers, which raised fears of a hack on the exchange. User posts on Telegram indicated that the FTX app and platform had been hacked.
It is believed that hackers will eventually seek to convert these digital currencies into actual money. But Robinson sees this as a challenge because of the cryptocurrency’s traceability. He said he expects hackers to use “mixers” to cover their blockchain path.
Robinson said mixers are services or software that allow obfuscation of the path of encrypted transactions on the blockchain, making it difficult or impossible to trace these funds. “This may be one of the reasons behind moving these assets to Bitcoin, where mixing services abound,” he added.
For its part, FTX on Sunday urged cryptocurrency exchanges to monitor stolen funds if hackers attempt to launder money via one of their services. “The exchanges must take all measures to secure the return of these funds to the bankruptcy estate,” FTX said in another tweet.
According to court filings, FTX owes its major creditors about $3.1 billion, which means that the stolen funds represent only 15 percent of what FTX owes to its major clients only.