FTX resumes claims process after addressing cyber breach

Post­ed: Sep­tem­ber 18, 2023

• FTX con­firmed that the breach affect­ed none of its systems.
• The exchange launched the cus­tomer claims por­tal on 11 July, but it inex­plic­a­bly went offline with­in an hour

Bank­rupt cryp­tocur­ren­cy exchange FTX has tak­en steps to bol­ster the secu­ri­ty of its cus­tomer claims por­tal fol­low­ing a cyber breach. This has allowed claimants to con­tin­ue sub­mit­ting claims for assets held on the exchange before it went insolvent.

Accord­ing to FTX, none of its sys­tems were affect­ed by the breach, which tar­get­ed its appoint­ed bank­rupt­cy claims agent, Kroll. The breach exposed non-sen­si­tive cus­tomer data for spe­cif­ic claimants, with FTX empha­siz­ing that account pass­words and funds remain unaffected.

FTX pro­vid­ed the fol­low­ing update regard­ing the recent Kroll cyber­se­cu­ri­ty inci­dent. Claimants may now resume activ­i­ties on our plat­form: https://t.co/DkYi2hDLbI. pic.twitter.com/Nfob4QQxjv

— FTX (@FTX_Official) Sep­tem­ber 16, 2023

Enhanced measures and progress on assets

Account hold­ers can now access their accounts and pro­ceed with the claims process for dig­i­tal assets held on the plat­form pri­or to its dec­la­ra­tion of bank­rupt­cy in Novem­ber 2022. This applies to indi­vid­u­als who held accounts with FTX, FTX.US, Block­fo­lio, FTX EU, FTX Japan, and Liquid.

As of 11 Sep­tem­ber, approx­i­mate­ly 36,075 cus­tomer claims worth $16 bil­lion had been filed against FTX and FTX.US, with 10% of these claims hav­ing been approved. Addi­tion­al­ly, 2,300 non-cus­tomer claims total­ing $65 bil­lion had been filed, includ­ing claims from Gen­e­sis, Cel­sius, and Voy­ager.

FTX clar­i­fied that freez­ing the accounts had been a pre­cau­tion­ary mea­sure. It added that it has imple­ment­ed addi­tion­al secu­ri­ty mea­sures since then. The exchange took these actions in response to sev­er­al issues report­ed with the claims por­tal recently.

FTX launched the cus­tomer claims por­tal on 11 July. How­ev­er, it inex­plic­a­bly went offline with­in an hour of its launch.

On 27 August, FTX tem­porar­i­ly sus­pend­ed accounts for affect­ed users who accessed its claims por­tal after the ini­tial dis­cov­ery of the cyber­se­cu­ri­ty attack against Kroll. Despite the sus­pen­sion, users were still able to sub­mit proof-of-claim via Kroll’s online cus­tomer form and by mail.

In anoth­er relat­ed devel­op­ment, the U.S. Bank­rupt­cy Court for the Dis­trict of Delaware recent­ly approved the sale of FTX’s dig­i­tal assets. Judge John Dorsey issued a rul­ing on 13 Sep­tem­ber, per­mit­ting FTX to sell assets in week­ly batch­es, sub­ject to strict con­di­tions, through an invest­ment adviser.

The ini­tial week has a $50 mil­lion lim­it, fol­lowed by $100 mil­lion in sub­se­quent weeks. How­ev­er, FTX remains pro­hib­it­ed from sell­ing its Bit­coin [BTC], Ethereum [ETH], and “cer­tain insid­er-affil­i­at­ed tokens” with­out a sep­a­rate deci­sion, fol­low­ing a 10-day notice to com­mit­tees and the U.S. trustee.