FTX Being Advised by Cybersecurity Firm Sygnia on Hack Inquiry, CEO Ray Says

The crypto exchange’s current chief executive blasted weak cybersecurity controls at the company under Sam Bankman-Fried’s leadership.

AccessTimeIconFeb 6, 2023 at 4:32 p.m. UTC
Updated Feb 6, 2023 at 4:47 p.m. UTC
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Collapsed crypto exchange FTX is being advised by cybersecurity company Sygnia after FTX apparently underwent a massive hack in November, its new chief executive, John J. Ray III, told a Delaware bankruptcy court on Monday.

The company had mysterious outflows worth hundreds of millions of dollars in early November, around the time the exchange filed for bankruptcy protection and founder Sam Bankman-Fried resigned as CEO.

Ray said he had hired technical experts in an attempt to shore up FTX’s insecure environment, and that Signia had prevented what could have been further hacking back in November.

“This case, you know, is about cybersecurity, or the failure of cybersecurity,” Ray said, outlining the various companies that are advising FTX as it seeks to wind up its affairs. “Sygnia is a highly technical cybersecurity firm.”

“Their services were critical, as we saw in the waking hours of the morning of the 11th [of November],” Ray said. “Hacking was occurring and this firm was not only instrumental in stopping that, but also rebuilding an environment that's highly sensitive to this day, because of the nature of crypto assets and the vulnerability of crypto assets.”

FTX “is probably a case study for how not to have a controlled environment for crypto,” said Ray, who has previously complained of weak governance by Bankman-Fried. He added the environment was “very vulnerable. We had hot wallets in a system where multiple people had access to passwords.”

“Literally, one of the founders could come into this environment, download half a billion dollars worth of wallets on a thumb drive, and walk off with them and there'll be no accounting for that whatsoever,” Ray said.

The federal bankruptcy court is set to decide Monday on whether to appoint an independent examiner into the events surrounding the crypto exchange’s collapse.

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Jack Schickler

Jack Schickler was a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He doesn’t own any crypto.


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