A crook who stole over $470 million (£383 million) in Bitcoin when FTX went down is attempting to pay it out while the exchange’s founder is on trial.
Last Monday, Sam Bankman-Fried’s high-profile court case began. The former crypto magnate denies any wrongdoing.
Experts estimate that $20 million of the stolen stockpile is being laundered into regular currency daily after laying dormant for nine months.
A new investigation reveals how the mystery thief attempts to conceal their trail.
FTX was previously one of the world’s largest exchange platforms, allowing crypto investors to purchase, trade, and store digital currencies. It declared bankruptcy on November 11, 2022, with billions of dollars in customer funds missing.
While bankruptcy attorneys search for the missing billions, Mr Bankman-Fried pleads not guilty to squandering customer funds and money laundering.
On the day FTX went bankrupt, an unidentified criminal stole hundreds of millions of dollars in Bitcoin handled by the exchange. The funds are still thought to be in his possession.
No one knows how the thief – or thieves – obtained digital keys to FTX crypto wallets, but it is believed that an insider or a hacker got the information.
The perpetrator transferred 9,500 Ethereum tokens worth $15.5 million from FTX’s wallet to a new wallet.
Hundreds of other crypto-assets were taken from the company’s wallets over the next few hours, totaling $477 million in transactions.
According to Elliptic, a cryptocurrency investigation agency, the criminal lost more than $100 million in the weeks following the attack because part of the assets were frozen or lost due to processing fees as they rapidly shifted the funds around to avoid capture.
However, by December, around $70 million had been successfully transferred to a cryptocurrency mixer – a criminal service used to launder Bitcoin, making it impossible to trace.
Criminals risk being detected or having their cash seized if they do not use a mixing service to conceal the illicit origins of their Bitcoin.
People can use such exchanges to trade coins like Bitcoin and Ethereum for ordinary currency.
Although mixers make tracing Bitcoin difficult, Elliptic could track a small portion of the cash – $4 million – routed to an exchange.
The remainder of the stolen FTX hoard – around $230 million – remained unaccounted for until September 30, the weekend before Mr Bankman-Fried’s trial began.
Almost every day since then, millions of dollars have been transported to a mixer for laundering and, presumably, cashing out.
Elliptic was able to track $54 million in Bitcoin being transmitted to the Sinbad mixer, but the trail has since gone dead.
“Crypto launderers have been known to wait for years to move and cash out assets once public attention has dissipated, but in this case, they have begun to move just as the world’s attention is once again directed towards FTX and the events of November 2022,” stated Tom Robinson, one of the co-founders of Elliptic
Another finding from the investigation of the finances suggests a possible link to Russian cybercrime.
Some stolen Bitcoin successfully laundered last year was tracked back to a wallet used by Russian-linked criminal organizations. According to Elliptic, this could indicate the presence of a broker or other middleman with ties to Russia.
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