The Hunt for the FTX Thieves Has Begun

It will be very difficult for the thieves to hide their profits in a spendable form without being identified, according to an investor and consultant who says she has been tracking the movements of the FTX funds with "morbid fascination." The real question is whether identifying the thieves will offer any recourse, since many of the most prolific thieves are Russians or North Koreans. It's not a question of who did it. The question is whether it will be actionable. They're on-shore.

The address that is holding $192 million worth of funds is being watched by many people. The account has been sending small sums ofEthereum-based token to a variety of exchange accounts, as well as Vitalik Buterin and Ukrainiancryptocurrencies fundraiser accounts. These transactions are likely meant to complicate the picture for law enforcement or other observers before any attempt is made to cash out the money.

The pilfering of FTX represents an unprecedented haul in the world of cryptocurrencies. Thieves from North Korea took $540 million in a hack of the Ronin bridge. The bust of a New York couple accused of money-laundering was the result of cryptocurrencies tracing.

In the case of the high-profile FTX theft and the exchange's overall collapse, tracing the missing funds could help put to rest suspicions that someone within FTX was responsible for the theft. Sam Bankman-Fried lost most of his fortune in the collapse. He and two other FTX executives are not allowed to leave the country according to an unconfirmed report. Bankman-Fried had a "backdoor" built into FTX's compliance system that allowed him to withdraw funds without being warned.

The chaos of FTX's collapse may have provided an opportunity for hackers to exploit panicked employees and trick them into clicking on a fake email. It's possible that bankrupt employees collaborated with hackers in order to recover their own lost assets.

The case has begun to resemble a very old one: the theft of a half billion dollars worth of bitcoins, discovered in 2014. The Gox exchange is the first of its kind. Chainalysis, along with law enforcement, helped to pin the theft on external hackers. Gox has his own team. Alexander Vinnik, a Russian man, was arrested in Greece and convicted of money-laundering after being extradited. Gox funds were found to have been used to exonerate Mt. Gox's executives are in hot water.

It's not clear whether history will repeat itself or whether the innocence of FTX's staff will be proven. It's a certainty that the whodunit behind the FTX theft will be found soon.