Paxos Freezes FTX-Linked Accounts with $19 Million

UTC by Babafemi Adebajo · 2 min read
Paxos Freezes FTX-Linked Accounts with $19 Million
Photo: Depositphotos

After FTX declared Chapter 11 bankruptcy, a series of unauthorized transactions happened on the company accounts.

Paxos has announced it froze four FTX-linked accounts holding over $19 million denominated in Paxos (PAXG) tokens after the accounts were linked to unauthorized transactions from FTX. Paxos freezer the accounts in response to an order from U.S law enforcement.

The order comes after the law enforcement agency began investigating the collapse of the FTX exchange. “This is a rapidly evolving matter,” stated Ben Gray, General Counsel for Paxos. Gray noted the firm would work closely with law enforcement and regulators as always.

Recall that Paxos has previously emphasized the need for proper oversight and regulation to move the industry forward and avoid a crisis. Also, Paxos pointed out that FTX’s dire situation is a result of irresponsible activity and deficient management practices.

“FTX and Alameda have broken confidence and trust in crypto and blockchain,” it tweeted.  Additionally, the firm praised law enforcement for their proactiveness on the case.

How the Funds Ended Up in the FTX-Linked Accounts

After FTX declared Chapter 11 bankruptcy, a series of unauthorized transactions happened on the company accounts. Blockchain analytics firm, Elliptic, estimates over $473 million moved out of the accounts. Others report that the unauthorized transactions are closer to $600 million.

Meanwhile, there have been different speculations about the true nature of the transactions. While some claim members of Sam Bankman Fried’s inner circle withdrew the funds to safeguard their interests, others suggest it was a hack.

Suggestions about a hack gained strength after FTX telegram administrator, Rey stated:

“FTX has been hacked. All funds seem to be gone. FTX apps are malware. Delete them. Chat is open. Don’t go on FTX site as it might download Trojans.”

Regardless, new FTX CEO John Ray has confirmed that unauthorized access occurred to the accounts. Likewise, he noted that the company initiated and fast-tracked the movement of remaining assets to digital cold storage after realizing the unauthorized access.

Alameda Research May Have Traded with Insider Knowledge

Meanwhile, there are emerging reports that Alameda Research may have used prior knowledge of future listings on FTX to determine the assets to buy ahead of time. According to Wall Street Journal, Alameda bought a total of 18 tokens amounting to $60 million before they were eventually listed.

As the investigations continue, it is clear that more will be revealed.

Altcoin News, Blockchain News, Cryptocurrency news, News
Babafemi Adebajo

An experienced writer with practical experience in the fintech industry. When not writing, he spends his time reading, researching or teaching.

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