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Paxos Freezes $19M From Four FTX-Linked Ethereum Addresses

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Blockchain infrastructure platform Paxos has frozen tokens from four Ethereum wallets linked to defunct crypto exchange FTX.

In an update on Nov. 12, Paxos said that it had frozen the funds at the direction of U.S. Federal Law enforcement. The tokens in question were 11,184.38 PAX Gold (PAXG) tokens, valued at approximately $19 million at the time. PAXG is a stablecoin pegged to the price of gold.

“These tokens were previously on the FTX.com platform and had moved to unknown wallet addresses over the prior 24 hours,” said Paxos in a statement.

Market participants speculated that the frozen funds belonged to an account attempting to move funds off FTX.

On Friday, the insolvent crypto exchange opened up withdrawals for Bahamas-based clients, claiming that it was at the request of local authorities – a claim that the Bahamas Securities Commission later refuted.

The exchange then reported a series of unauthorized transactions late on Friday night, during which $600 million worth of funds moved off the exchange. The suspicious activity drove speculation that the so-called hack was orchestrated by an FTX insider.

If indeed the result of a hacker, a blockchain security expert told CoinDesk on Monday that the thief had made a “stupid mistake.” Dyma Budorin, the co-founder and CEO of Hacken, told the crypto publication that the hacker appeared to have had access to all FTX’s cold wallet storages involved in the exploit.

The alleged hacker gave away his identity when he opened his KYC-compliant Kraken account to execute a series of transactions. Budorin said the identity of the person behind the exploit is confidential information, but revealed that he or she is a U.S. citizen. 

Nick Percoco, chief security officer of crypto exchange Kraken, confirmed in a tweet on Saturday that the exchange knows the alleged hacker’s identity. 

Even before these revelations, Twitter was rife with theories that FTX CEO Sam Bankman-Fried himself was behind the exploit.

Meanwhile, Bankman-Fried is said to have appeared surprisingly calm in a Monday interview with the New York Times. “You would’ve thought that I’d be getting no sleep right now, and instead I’m getting some. It could be worse,” Bankman-Fried told the New York Times.

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