US Prosecutors Charge Trio with Wire Fraud and Identity Theft in $400M FTX Hack

US Prosecutors Charge Trio with Wire Fraud and Identity Theft in $400M FTX Hack

UTC by Tolu Ajiboye · 3 min read
US Prosecutors Charge Trio with Wire Fraud and Identity Theft in $400M FTX Hack
Photo: Depositphotos

The US government is finally resolving the FTX hack as it files charge against three people involve in the phone swap hack.

The United States government has charged three people for their involvement in a phone hack that resulted in the loss of $400 million from the FTX exchange. The hackers had drained FTX via a series of SIM-swap attacks shortly after the exchange filed for bankruptcy in 2022.

DOJ Files Charge Against Trio for FTX SIM-Swap Fraud

The US Department of Justice has accused Emily Hernandez, Carter Rohn, and Robert Powell of conspiracy to commit identity theft and wire fraud, according to an indictment filed in Washington federal court. The 18-page document states that the trio was part of a SIM swap operation that hit 50 victims for over 2 years, from March 2021 to April 2023.

According to reports, the hackers obtained personal data from these victims and then tricked cell phone service providers into porting the victims’ phone numbers to a phone they held. This allowed them to intercept text messages and use codes received for multi-factor authentication to access bank and crypto accounts.

According to a Bloomberg report, Hernandez used a fake ID carrying an FTX employee’s details to trick AT&T into transferring the employee’s account to another SIM card sometime in November. After this was successful, Powell used multiple multi-factor authentication codes to access the exchange’s wallet. Reportedly, Powell is the group leader.

The DoJ’s charge sheds some light on the FTX case, finally indicating some direction as to the perpetrators behind the hack. At the time of the hack, some reports suggested that an insider, probably someone close to founder and former CEO Sam Bankman-Fried (SBF), coordinated it.

Days after the hack, a blockchain analysis firm reported that the hacker converted thousands of dollars worth of stolen funds. As of the time of the report, the hackers had swapped at least 45,000 ETH into wrapped Bitcoin (BTC) and then converted them to about 3,558.54 native Bitcoins.

FTX Continues Repayment Efforts

FTX has tried over the years to reopen and resume services. For a while, the company was in touch with potential buyers, looking for ways to revive operations. However, many of these parties backed out of their respective deals after several issues became evident following extensive due diligence.

Nonetheless, the defunct exchange is still working hard at paying off its creditors. The company’s cash reserves recently doubled to $4.4 billion at the end of last year, from $2.3 billion in October. FTX was able to increase these reserves by selling digital assets to get funds for use in repayments. Bankruptcy advisers are looking for nearly $8.7 billion in total. As part of efforts to recover funds, FTX sold 22 million shares of the Grayscale Bitcoin Trust (GBTC), reportedly worth about $1 billion.

The company’s bankruptcy estate has received approval to sell several luxury properties in the Bahamas related to the FTX and SBF. Affected properties include the Orchid Penthouse worth $40 million, and several other units. The sale is to pull in more funds to increase capital for creditor repayments.

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