$4 Million in Crypto Swiped in FTX Hack Resurfaces

Roughly $4 million in cryptocurrency stolen from FTX last year is reportedly back in circulation.

As Coindesk reported, blockchain data shows that around 2,500 ether tied to an earlier, and much larger, exploit of FTX began moving early Saturday (Sept. 30).

According to the report, ether kept in a wallet associated with the FTX accounts drainer started circulating for the first time in almost a year, with the funds being divided into two and then again a few more times via other transactions.

Nearly half the funds — 1,200 ether — were moved using the Railgun privacy wallet, which shields transactions, meaning the use of the funds is not clear. Another 700 were transferred using the Thorchain router, which lets users swap tokens between different blockchains.

The original hack — involving roughly $372 million, happened Nov. 11 of last year, hours after FTX declared bankruptcy. The Department of Justice later launched a criminal probe of the theft led by its National Cryptocurrency Enforcement Team.

Coindesk says there is still 12,500 ETH (worth roughly $21 million at current prices) in the original wallet.

This update on the hacked funds comes days before FTX’s founder Sam Bankman-Fried is set to stand trial for allegedly using the company as his personal piggy bank.

And as noted here last week, the nearly 11 months since FTX’s collapse has seen little movement on the crypto regulation front.

Since then, “only two crypto bills have made it out of congressional committees, one regulating stablecoins and one defining when digital tokens are classified as a commodity or security,” PYMNTS wrote. “Both face stiff opposition.”

U.S. Securities and Exchange Commission Chairman Gary Gensler testified before the House of Financial Services Committee last week and restated his long-held position that not only are most cryptocurrencies unregistered securities, but most crypto companies in the U.S. are operating outside the bounds of compliance.

“Given this industry’s wide-ranging noncompliance with the securities laws, it’s not surprising that we’ve seen many problems in these markets,” Gensler said, adding that, “Given that most crypto tokens are subject to the securities laws, it follows that most crypto intermediaries have to comply with securities laws as well.”

Meanwhile, the failure of lawmakers to adopt any crypto legislation comes at a time when private issuers are increasingly exploring the sector.

For example, Visa expanded its stablecoin settlement capabilities with Circle’s USDC stablecoin last month by adding pilot programs with merchant acquirers Worldpay and Nuvei, while PayPal recently introduced its PayPal USD (PYUSD) stablecoin on Venmo.