FTX Investigating Possible Hack Hours After Bankruptcy Filing

“You as a customer are like, ‘Oh shoot, I don’t want to be the last one where there’s no funds left to actually give me my money back, so I’m going to try to withdraw,'” Mr. Veradittakit of Pantera Capital said.

As speculation about the suspicious FTX fund transfers spread on Twitter, crypto industry officials appeared to be piecing together the situation in real time. After reports circulated that someone involved in moving funds had an account on Kraken, another crypto exchange, Kraken’s chief security officer, Nick Percoco, tweeted“We know the identity of the user.”

Ryne Miller, the general counsel of the US arm of FTX, quickly responded. “Interested in anything you are open to share,” he said. “Could you reach out to me?” A Kraken spokesman did not immediately respond to a request for comment.

Mr. Bankman-Fried’s collapse was a stunning fall from grace for an executive who had been compared to titans of finance like John Pierpont Morgan and Warren Buffett. But as the bankruptcy has thrown his empire into turmoil, a different picture is emerging.

Investigators at the SEC and the Justice Department are examining whether Mr. Bankman-Fried improperly used customer funds to prop up Alameda Research, a trading firm that he also owns. FTX lent as much as $10 billion in customer funds to Alameda, according to a person familiar with the finances.

Months before the bankruptcy, cracks were emerging. Mr. Bankman-Fried reacted defensively when offered feedback that he was overextending himself and needed to hire more staff, according to someone close to him. He also delayed bonus payments to employees that were supposed to go out in the middle of the year, making the payments months late, the person said.

And Mr. Bankman-Fried reacted with irritation when an employee asked to receive more of the bonus in cash rather than equity, the person said, saying that staff who didn’t want a stake in the company should leave.

FTX did not respond to a request for comment.

Erin Griffith and Stephen Gandel contributed reporting.

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