DOJ Revealed How Crypto Exchange FTX Plunged into Bankruptcy, Raising Bigger Concerns

Three individuals face charges for orchestrating a massive SIM-swapping scam from FTX, Bloomberg reported on Thursday. This siphoned more than $400 million from the cryptocurrency exchange in the run-up to the FTX bankruptcy.

Shortly after FTX’s bankruptcy filing in November 2022 and Sam Bankman-Fried’s resignation, hackers reportedly drained funds from the platform. Only to be funneled through a network of decentralized exchanges. The reports come after SBF was convicted on seven counts of fraud and the exchange was attempting to come out of the liquidation process.

SIM-swapping ring targeted FTX and others

The development also follows FTX’s decision to repay its customers in full. The exchange has also revealed that it will let go of its previous plans to restart its crypto trading platform after two years of challenges in reaching a resolution.

Meanwhile, the U.S. Department of Justice has charged Robert Powell, Emily Hernandez, and Carter Rohn in the SIM-swapping ring. This criminal operation targeted not only FTX but also various individuals over the course of two years.

According to the federal indictment filed in Washington, Powell, Rohn, and Hernandez gathered personal information from approximately 50 victims. Using this information, they convinced cellular providers to transfer the victims’ phone numbers into their possession. With control over these numbers, the trio intercepted text messages, including multi-factor authentication codes, granting them access to victims’ financial accounts and cryptocurrency wallets.

Singapore concerned about crypto-draining kits

This incident is just another reminder of the issue of cybersecurity within the crypto space. While this wasn’t a case of advanced hacking but misrepresentation and manipulation, it appears that criminals have become more sophisticated.

Even high-profile figures like Chris Larsen, Ripple’s co-founder, fell victim to cyber theft worth $110 million just recently. The hacker is known to have drained his personal crypto wallets on January 31.

Meanwhile, Singaporean authorities and the cyber security agency expressed concerns about cryptocurrency draining kits. 

(1/2) As the use of cryptocurrencies become increasingly popular, cybercriminals are also increasingly leveraging crypto drainers to target owners of cryptocurrency wallets.

— CSA (@CSAsingapore) January 31, 2024

They issued a joint statement warning that cybercriminals increasingly utilize these kits to target digital wallet owners, emphasizing the need for heightened vigilance and security measures.