In the shrouded realm of blockchain, the FTX hack that transpired on November 11, 2022, stands as a glaring testament to the cryptic trails a nefarious act can leave behind. The Bahamas-based cryptocurrency exchange, FTX, fell prey to an unidentified hacker who made off with a staggering $477 million, plunging the exchange into bankruptcy. The maleficent actor was quick to take to the shadows, embarking on a quest to launder the stolen assets through a maze of decentralized exchanges (DEXs), cross-chain bridges, and mixers.
The pilfered assets witnessed a loss of $94 million in the ensuing days, as the thief hastily funneled them through various blockchain services. RenBridge, a service held by FTX’s sister company Alameda Research, saw $74 million of the stolen cache. Yet, the bulk of these pilfered assets lay dormant, only to stir again as the Bankman-Fried trial neared, suggesting a deliberate orchestration.
The FTX’s hacker initial modus operandi was to swap the stolen tokens for native assets, like Ether, to escape the clutches of centralized authorities. Employing DEXs like Uniswap and PancakeSwap, the thief could swap tokens without fear of seizure. This initial laundering act was the precursor to a more sophisticated ploy: cross-chain laundering. The hacker funneled assets through decentralized cross-chain bridges like Multichain and Wormhole, a tactic to obscure the assets’ trail and facilitate further laundering.
One notable accomplice in this cryptic narrative was RenBridge. The thief, having accumulated 245,000 ETH now worth around $306 million, utilized RenBridge to transfer 65,000 ETH to the Bitcoin blockchain, further muddying the trail. The sinister irony lies in the fact that RenBridge was operated by Alameda Research, a sister company to the beleaguered FTX.
Once the assets were safely harbored in the Bitcoin realm, the thief employed mixers like ChipMixer to cloak their transactions, a tactic often used to thwart tracing efforts. However, as time rolled on, law enforcement clamped down on ChipMixer, pushing the thief towards newer shores like Sinbad, a suspected rebranded version of the sanctioned Blender mixer.
Fast forward to September 30, 2023, the dormant assets awoke once more. The thief, adapting to the closing net, turned to THORSwap for laundering, converting a hefty sum of Ether to Bitcoin. THORSwap, however, soon suspended its interface to stem the illicit flow of funds, albeit to little avail as the thief continued to exploit the underlying THORChain bridge.
Despite the meticulous blockchain trails unraveled by Elliptic Research, the identity of the FTX’s hacker remains shrouded in mystery. Speculations range from an inside job, possibly implicating Sam Bankman-Fried, to external rogue actors linked to North Korea’s Lazarus Group or Russia-affiliated criminal networks. The saga of the FTX hack unveils a sinister dance on the blockchain, leaving in its wake a tale of obscure trails, elusive thieves, and the relentless march of illicit digital transactions.
The unfolding drama around the FTX hack serves as a stark reminder of the continuous evolution within the crypto laundering realm. As the law enforcement and compliance sectors refine their strategies, so do the criminal minds lurking within the blockchain’s cryptic maze. The “State of Cross-chain Crime” report by Elliptic unveils the latest typologies and trends in cross-chain criminality, shedding light on the ever-evolving tactics deployed by crypto launderers.