Sam Bankman-Fried denies he has fled to Argentina as $600 million ‘hacked’ from FTX wallets

The disgraced boss of a failed crypto exchange has denied rumours that he has fled to Argentina just as millions were supposedly “hacked” from its digital wallets.

The disgraced founder of bankrupt cryptocurrency exchange FTX has denied rumours he has fled to South America around the same time $US600 million was siphoned from its digital wallets after being “hacked”.

On Friday, crypto wunderkind Sam Bankman-Fried — known as SBF — filed for bankruptcy for FTX and sister trading firm Alameda Research.

And just a day later, the crytpo exchange claimed it had fallen victim to a hack.

Company representatives said “unauthorised transactions” had occurred on FTX with CoinDesk reporting that a whopping $US600 million ($895 million) had mysteriously flowed out of the exchange’s wallets.

Around the same time, rumours swirled that Mr Bankman-Fried’s private jet was en route from his home in the Bahamas to Argentina — an allegation he has denied to Reuters.

Recipient wallet here: https://t.co/gHaDOXBCOC

They seem to be moving everything pic.twitter.com/lFDgNgqukF

— foobar (@0xfoobar) November 12, 2022

Following the Chapter 11 bankruptcy filings - FTX US and FTX [dot] com initiated precautionary steps to move all digital assets to cold storage. Process was expedited this evening - to mitigate damage upon observing unauthorized transactions.

— Ryne Miller (@_Ryne_Miller) November 12, 2022

On Saturday, FTX’s US general counsel, Ryne Miller, revealed that the company had detected “unauthorised transactions” on Friday night.

FTX said it had moved all digital assets to a cold storage, or offline location, to stop any further thefts.

On FTX’s official Telegram page, the company claimed it had been hacked.

“FTX has been hacked,” an administrator wrote. “FTX apps are malware. Delete them. Chat is open. Don’t go on FTX site as it might download Trojans.”

Some customers have reported having a balance of $0 after their money was siphoned out.

Several suggested that the sophistication of the hack indicated a possible inside job and others pointed out the timing was strange, since it happened the same day the exchange went bust.

Sam Bankman-Fried, founder and CEO of FTX. Picture: Saul Loeb/AFP

As rumours swirled online, Mr Bankman-Fried insisted he had not fled the Bahamas for Buenos Aires.

When asked by Reuters if he had flown to Argentina, he simply said in a text message, “Nope.”

He added that he was still in the Bahamas.

Argentina has an extradition treaty with the US, so is not an ideal location for someone wanting to evade authorities, CNBC noted.

The hacking twist came after two whistleblowers also claimed that Mr Bankman-Fried had orchestrated a mysterious outflow of at least $US1.5 billion ($2.2 billion) — and possibly as much as $US3 billion ($4.5 billion) — of customer funds into Alameda.

Both anonymous sources — who held senior positions at FTX and were familiar with the company’s finances — made some bombshell allegations to Reuters.

The rumour is SBF on his way to Argentina.. pic.twitter.com/Jnxm3bprm9

— CoinMamba (@coinmamba) November 12, 2022

They claimed Bankman-Fried secretly transferred billions of dollars in client money to Alameda.

The Wall Street Journal reported earlier this week that FTX had loaned billions of dollars to Alameda to fund risky trades.

The FTX officials claimed they saw the evidence that the money was missing in copies of financial records Mr Bankman-Fried shared with company executives last week, according to Reuters.

In a text message to Reuters, he said he “disagreed with the characterisation” of the billion-dollar transfer.

“We didn’t secretly transfer,” he said. “We had confusing internal labelling and misread it,” he added, without elaborating.

“???” was Mr Bankman-Fried’s response, when asked about the missing cash.

FTX filed for bankruptcy earlier this week. Picture: Olivier Douliery/AFP

On Friday, Mr Bankman-Fried stepped down from his CEO position as the Bahamas-based FTX and filed for Chapter 11 bankruptcy, after scrambling to shore up a $US8 billion ($12 billion) liquidity crisis that has left investors unable to claim their funds.

The bulk of his fortune was tied up in FTX and Alameda.

His holdings of FTX were worth about $US6.2 billion ($9.6 billion) at its peak and $US7.4 billion ($11.5 billion) was tied up in Alameda.

For weeks, there were rumours that FTX and Alameda were in trouble. CoinDesk revealed that Alameda’s $US14.6 billion ($22.7 billion) balance sheet was full of the FTT token, a coin invented by FTX.

SBF denies he has fled to South America. Picture: Lam Yik/Bloomberg

And throughout that, Mr Bankman-Fried had been involved in a public standoff with Changpeng “CZ” Zhao, the chief executive of Binance, a major crypto exchange. They had been trading barbs for months.

On November 7, Mr Zhao announced his firm was liquidating its FTT holdings, giving weight to rumours about the financial wellbeing of Alameda and FTX. He cited “recent revelations that have come to light” and said it was not a “move against a competitor”.

FTX then revealed it was suffering “liquidity” problems as customers tried to cash out over concerns the exchange was on its last legs.

The fourth-biggest exchange paused withdrawals as it scrambled for emergency investment, striking a rescue deal to sell itself to Binance on Tuesday.

But Binance walked away from the takeover less than 24 hours later citing “reports regarding mishandled customer funds and alleged US agency investigations”, adding while it had hoped to be able to support FTX’s customers to provide liquidity, “the issues are beyond our control or ability to help”.

Mr Bankman-Fried told investors that the company needs $US4 billion ($6.2 billion) to remain solvent and is facing a shortfall of $US8 billion ($12.4 billion).

The US Securities and Exchange Commission is looking into whether the platform mishandled customer funds as well as the firm’s relationship to other companies.

The Commodity Futures Trading Commission is also probing FTX.

— with Andrew Backhouse and NY Post

Originally published as Sam Bankman-Fried denies he has fled to Argentina as $600 million ‘hacked’ from FTX wallets