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Crypto Exchange FTX to Provide $6M Compensation to Phishing Victims

| Updated
by Kofi Ansah · 2 min read
Crypto Exchange FTX to Provide $6M Compensation to Phishing Victims
Photo: Depositphotos

The CEO explained that only the accounts of FTX users would be reimbursed.

Cryptocurrency exchange FTX has announced that it will provide around $6 million in compensation to victims of a phishing scam that plagued the firm. The attack on the crypto exchange saw hackers conduct unauthorized trades on certain FTX users’ accounts.

Crypto billionaire and CEO of the crypto firm Sam Bankman-Fried said in a Twitter thread that the decision is an exception, describing it as a “one-off” as the firm will not be making it a habit to compensate users who fall victim to phishing attacks on websites other than FTX. The CEO explained that only the accounts of FTX users would be reimbursed.

Bankman-Fried also stated that, in general, the crypto firm cannot compensate users for falling victim to phishing attacks by fake versions of other companies in the space. He highlighted that not only was this not FTX getting phished, it wasn’t even an FTX site.

“It isn’t FTX and we have basically no control over it,” he stated.

Bankman-Fried added that if the perpetrators send back 95% of the US$6 million taken from FTX accounts within 24 hours as compensation, “the crypto firm will absolve them.”

In the recent phishing attack, hackers obtained user account application programming interface (API) keys, enabling them to conduct unlawful trades with their crypto exchange accounts.

The hack was discovered on October 21 when 3Commas claimed it received notification that some of its members were engaging in illegal trading. To prevent further losses, FTX and 3Commas suspended the suspicious accounts and disabled the hacked API keys after conducting an initial investigation.

In a blog post, he called the “5-5 standard” on October 19, Bankman-Fried suggested that hackers should be allowed to keep either $5 million or 5% of the money they have stolen, whichever is less. He added that this is part of an effort to curb the security exploits plaguing the crypto-asset industry.

The month of October has been called “hacktober” by the cryptocurrency community since Chainalysis announced on October 13 that October 2022 has been the “largest month” ever for hacking activities, despite the report being released before the middle of the month.

At the time of the report, over $3 billion had been exploited by hackers in over 125 separate incidents since the start of the month.

Blockchain News, Cryptocurrency News, News
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