Crypto exchange FTX is under more scrutiny, as users on Twitter allege that someone from the inside is taking bribes to KYC customers and helping them withdraw funds. A user profile named ‘Algotrading’ posted a few days ago, saying that he had his 8-figure worth of assets locked up on the exchange. This is also the user who called the drop on Terra Luna before the big crash earlier this year.
Yesterday, he posted on Twitter asking if anyone could help him with KYC and withdraw his assets from the exchange. FTX has temporarily frozen all crypto withdrawals in the US, as the company prepares for bankruptcy. However, the user ‘Algotrading’ offered $100K to anyone who could help him withdraw the funds from the platform.
The user again posted an hour later saying that his account was KYC’d and he was successfully able to withdraw the funds. According to the user’s wallet history, he was able to withdraw over $2 million in USDT from the platform. Details on Etherscan showed that the wallet received multiple rounds of USDT from the exchange shortly after the tweet.
Someone within FTX is withdrawing users’ funds for them
Multiple reports suggest that some employees are taking advantage of the situation to feed their pockets and help users take out their funds from the exchange. Transaction history on Etherscan shows that apparently, internal accounts based in the Bahamas are responsible for this. As the company’s headquarters are also in the Bahamas, it is most likely to be an internal employee or group taking money under the table to provide this unique privilege to some users.
Reports suggest that people behind this act are bypassing the internal balance transfer block by selling NFTs on FTX’s NFT marketplace. Apparently, the internal employees use the locked fund to create NFTs and the users buy it with their full balance.
This entire saga is significantly hurting the wider crypto industry. Just last week, the crypto market was seeing a short-term bull run, as most tier-1 tokens were able to break beyond their resistance level. However, since the FTX story, the market took a deeper plunge, losing billions in just a couple of days.
The exchange faces several allegations, including the continuous breach of regulations, investing user funds without acknowledgement, and forcing employees to invest in crypto. The company has now officially commenced Chapter 11 Bankruptcy Protection, along with its 130 affiliated organisations.