The California-based sea monster exchange, Kraken, has blocked a number of crypto accounts upon instructions from authorities because they are traceable to FTX, Alameda Research and their executives.
Authorities order Kraken to block FTX crypto accounts
In this period, Kraken, like all other exchanges, has raised its vigilance level both in terms of security and on-balance sheet coverage following the unfortunate FTX case.
The California-based sea monster platform, after a few days of working with the authorities, has, at their request, shut down a number of accounts traceable to FTX, Alameda Research and their executives.
All of this came to light following the detection of an account on the platform that was used to make unauthorized transfers to FTX.
Once the shady operation was detected, investigations began, which circumscribed the problem and allowed the accounts to be closed as described above.
Sunday morning, at dawn, Kraken’s official Twitter profile clearly explained:
“Kraken spoke with law enforcement about a handful of accounts owned by the failed FTX group, Alameda Research and their executives. Those accounts were frozen to protect their creditors. Other Kraken customers are not interested. Kraken maintains full reserves.”
The specification was necessary in order to distance itself from what had happened to FTX and to explain that the operational freeze was solely and only related to accounts traceable to FTX.
The platform of the now-wanted Sam Bankman-Fried, filed for Chapter 11 bankruptcy last Friday and John Ray, was appointed as the new CEO of FTX Group after Sam Bankman-Fried’s resignation and escape.
Hackers take the field
Apparently, anomalous movements were detected with a pattern very similar to that used by a hacker already known to insiders and authorities.
Jhon Ray, the company’s new CEO and architect of its restructuring, through his experience and a series of internal investigations, was able to ascertain that the anomalous movements were there and it is precisely the criminal scheme used by a certain hacker already known to law enforcement.
The sums were withdrawn from Kraken exchange accounts and moved to a wallet already known in the past to be the beneficiary of the known hacker’s cryptocurrency criminal proceeds.
Kraken’s head of security, Nick Percoco, hinted on Twitter that the cybercriminal is already known to the authorities and also to the exchange itself, and that he obviously will not be able to name him, at least for now.
Ryne Miller, FTX general counsel, Alameda Research, on Saturday, quoting FTX CEO said:
“As widely reported, there has been unauthorized access to certain resources … We have been in contact and are coordinating with relevant law enforcement and regulatory authorities.”
The investigation is well underway and some insiders are reassuring that authorities are close to turning over the criminal behind the events to authorities for due process.
Miller, after what happened to FTX, in an effort to prevent and in order to further improve Kraken’s reliability, added the following:
“Following the Chapter 11 bankruptcy filings – FTX US and FTX.com initiated precautionary steps to move all digital assets to cold storage. Process was expedited this evening – to mitigate damage upon observing unauthorized transactions.”
There is a rush to secure accounts (declared by all to be already in place) by all exchanges who, given the magnitude of the domino effect unleashed by Kraken, intend to be prepared for any problems and demonstrate that their business model is sound and serious.
The FTX case has damaged not only the world of exchanges but also the cryptocurrencies themselves, which have lost a lot of ground in these days of fire, with good grace to those who were already screaming about the bull market and the fact that the lows had already been touched.
Many platforms, as announced by CZ himself for the giant Binance, are adopting Proof of Reserve for this very purpose.
Proof of Reserve, is that modus operandi that obliges those who choose to apply it to set aside a portion of what users deposit on their online wallets each time, the practice is necessary to be able to cope, for example, with exactly such massive waves of withdrawals as the one that FTX recently went through and which led to its failure.
Meanwhile, former FTX CEO Sam Bankman-Fried is wanted on an international arrest warrant for crimes committed at the helm of the digital currency exchange platform.