back to article FTX audit finds $415m in crypto mysteriously vanished

Liquidators at bankrupt crypto exchange FTX say they've thus far located $5.5 billion in assets, and confirmed that $415 million stolen in a November hack is still missing.  The report [PDF], presented by FTX debtors to its unsecured creditor committee, said that $1.7 billion in cash, $2.5 billion in crypto, and $300 million …

  1. Winkypop Silver badge
    Facepalm

    These massive loss figures just roll off the tongue

    And yet it’s still not enough to put “investors” off the crypto merry go round.

    1. Persona Silver badge

      Re: These massive loss figures just roll off the tongue

      It doesn't put "investors" off as folks holding crypto are going around shouting even more loudly about how good it is. The only way the price is going to go up, so they make/recover money, is if more people want to buy it than sell it. It's a "belief" based asset.

      1. Baximelter

        Re: These massive loss figures just roll off the tongue

        All paper money is a "belief" based asset. Gold and silver are not, since they have legitimate use in industry and as jewelry.

    2. firefly

      Re: These massive loss figures just roll off the tongue

      Crypto enthusiasts are some of the biggest morons I've ever encountered. They have little clue how finance, economics, technology or life in general works.

      I've noticed that they have all been celebrating the recent pump of Bitcoin back over $20k, even though there's clear evidence this was initiated by Binance using fake BUSD printed out of thin air. But point that out and they will dismiss it as FUD.

    3. doublelayer Silver badge

      Re: These massive loss figures just roll off the tongue

      This is like saying that the Madoff scheme didn't put people off the stock market. There are a lot of reasons not to like cryptocurrency in general, but the FTX debacle doesn't prove it; it proves that investing in something that's even worse than a cryptocurrency (a centralized token that a company just makes up instead of a decentralized one that you can audit if you want to) is a bad idea. It also indicates that giving your money to people who are going to steal it is bad, but this one is less surprising. But for instance, it doesn't say much about Bitcoin, because FTX's crimes didn't rely on anything unusual about Bitcoin any more than it relied on peculiarities of dollars.

      It's not hard to have real reasons to distrust or dislike cryptocurrency. Attempting to expand any event into an "all cryptocurrency is bad" message risks making arguments that are inaccurate or difficult to defend in detail.

  2. darklord

    So someone steals something that doesnt exactly exist

    So the only loser is those holding fake currency.

    Currency is based on gold assets held by the state. Crypto currency is technically nothing so someone has stolen 415 Million nothings. just a way of the Rich corrupting and controlling money markets.

    If they cant increase countries wealth in Gold reserves those with power decide lets make up our own country which is magicked out of thin air.

    Douglas adams springs to mind in hitchikers guide to the galaxy and the use of leaves as currency by the accountants. huge inflation.

    1. Flocke Kroes Silver badge

      Re: So someone steals something that doesnt exactly exist

      Decades ago a £1 note could be exchanged for an amount of gold equal in value to 1 pound (mass) of silver. There was a promise to that effect written on the note. For a long time the promise on a £10 not has been that someone promises to pay the bearer on demand the sum of ten pounds (presumably GBP). There is a signature purportedly of the chief cashier of the bank of England but it is not particularly associated with the promise. There is no mention of gold, silver or any exchange rate between GBP and precious metals.

      The value of a promissory note for GBP is that many shops are willing to trade them for real goods and that many businesses will trade services for them. What you can get for £1 goes mostly down (with the occasional temporary up) over time. The Bank of England issues promises for GBP slightly faster than they receive them in the form of taxes. There is some hope that the BoE will not suddenly issue a huge quantity of extra promises very often which gives GBP some stability.

      The value of bitcoins goes up when a new bunch of fools can be convinced to buy and keep them for a while. It goes down when a large number of those fools try to cash out at the same time. To some extent this happens with news reports and endorsements from famous actors, sportsmen and flamboyant businessmen. If you have more control over these events than other traders then it is possible to profit from bitcoin at the expanse of people who believe the hype.

      1. jmch Silver badge

        Re: So someone steals something that doesnt exactly exist

        "Currency is based on gold assets held by the state...

        If they cant increase countries wealth in Gold reserves those with power decide lets make up our own country which is magicked out of thin air."

        It's a bit more subtle than that. Currency has to do 2 things - act as a store of value and as a medium of exchange. Gold was historically used as a store of value because it cannot be easily created, destroyed or mined. Therefore people were willing to trade goods and services for gold safe in the knowledge that the gold they acquire would hold its value. BUT the actual value of the currency is based on the amount of goods and services in the economy. If you just suddenly increase the supply of gold without increasing the goods and services in the economy, the value of gold crashes and takes the economy with it. This is why Imperial Spain crashed and burned - they thought that all the gold they plundered from the Americas made them richer, but in fact it just crashed the value of the gold they already had. Fiat currency magicked out of thin air to flood the economy has the same effect as the Spanish had flooding their economy with stolen gold.

        The notes that were 'promise of delivery' for gold or silver were just an improvement on the 'medium of exchange' part. It's easier to transact in notes than in coins, especially for high-value transactions. As long as the gold reserves were stable AND the amount of promissory notes doesn't radically change, you get both a stable store of value and a simple means of exchange. Not coincidentally, the time in the late 19th century when this system was in place was a golden age of wealth and trade.

        "The value of bitcoins goes up when a new bunch of fools can be convinced to buy and keep them for a while. It goes down when a large number of those fools try to cash out at the same time. "

        Absolutely true, and yet Bitcoin is the only cryptocurrency AFAIK that cannot be created out of thin air by it's managing entity, so it is, in effect, "digital gold". There is a lot of foolish speculation around it but the core principle for holding is is the same as that for holding gold, viz (a) there's enough people believing in it's value to give it real value and (b) it's value can't be inflated away.

        1. amanfromMars 1 Silver badge

          Re: So someone steals something that doesnt exactly exist

          Fiat currency magicked out of thin air to flood the economy has the same effect as the Spanish had flooding their economy with stolen gold. .... jmch

          Hence the current disastrous western capitalist systems debt and deficit reality which QE [Quantitative Easing] aka fiat currency magicked out of thin air to flood the economy is responsible and accountable for.

          And "Currency is based on gold assets held by the state...” is pig ignorant disinformation beloved by more than just the mentally deficient and oft criminally insane. Currency is based upon the trust one has in the primacy of a national and/or centralising intelligence agency ...... the effectiveness in command and control of the almighty power and limitless energy stored in deep and dark secret matters for global unleashing/universal knowledge ...... and we all know who has none of those to share and thus would their currency be virtually useless and practically worthless?

          Changed days indeed now, for some who thought changed days could never, and therefore would never, ever come.

          1. Anonymous Coward
            Anonymous Coward

            dried frog pills

            Wow, I got through 2/3rd of that before realising that was amanfrom mars, someone has been taking their dried frog pills as directed for once!

            1. amanfromMars 1 Silver badge

              Re: dried frog pills for all manner of strange ills and even stranger matters

              Wow, I got through 2/3rd of that before realising that was amanfrom mars, someone has been taking their dried frog pills as directed for once! ... Anonymous Coward

              And whenever washed down with a couple of cups of Chancellor’s coffee, AC, does everything spring into a NEUKlearer HyperRadioProACTive IT Dimension and Extension with disturbing new half lifes in serial Bull Shitter cycles and circles :-) ....

              GB News’ Economics and Business editor Liam Halligan also criticised the video.

              He joined Mark Longhurst to share his dismay: “It’s all a jolly game isn’t it for the politicians isn’t it? Meanwhile people are frightened about if they can buy their kid shoes? Can they buy a school uniform? Can they pay a soaring electricity bill?

              He continued: “Some parts of the Chancellor’s video were a little bit disingenuous.

              “He talked about inflation stemming from lockdown - yes, that’s true. Supply chain problems, a big wall of pent up demand that pushed prices.

              “He talked about price rises stemming from the war in Ukraine, absolutely. Even though we were already at a 30-year-high for inflation in January last year which was before the war in Ukraine.

              “What he didn’t mention was quantitative easing. A rather tongue-tied term to describe when the Bank of England basically conjures up lots of money from nowhere and puts it into the system. Basically buying bonds, financing Government spending.

              “They’d deny that, they’d deny that but it is the undeniable impact of quantitative easing. That money goes into the system, inflation as economic textbooks will tell you is too much money chasing too few goods.

              “If you increase the amount of money as the Bank of England has enormously, you will get inflation.

              “I would like to see our political media class, talking a lot more about the implications of that massive expansion.” ..... https://www.gbnews.uk/news/jeremy-hunt-in-cringe-worthy-video-using-coffee-cups-to-explain-inflation-watch/427033

              Welcome to the Certifiable Madhouse that is Mainlining Main Stream Media with Advanced IntelAIgent IT Manipulation of the Resultant Arrogant and Ignorant Mass Mania.

              1. First Light Silver badge

                Re: dried frog pills for all manner of strange ills and even stranger matters

                Oh dear, GB "news"?

                That's naughty of you.

                And no mention of Brexit of course.

        2. Claptrap314 Silver badge

          Re: So someone steals something that doesnt exactly exist

          I think you've skipped a couple of points.

          The first is inherent value. In the old days, the inherent value of gold was that it made good jewelry. Today, of course, it is important or critical component of a lot of manufacturing processes. The inherent value of fiat is that it pays taxes. There is no inherent value in coin. The fact that there is a cost to their manufacture, and that, absent a change accepted by 50% of the miner power, the supply is limited, is designed as an aid to stability, but with no underlying inherent value, holding coin needs be a purely speculative play. And a long-term bad play should the boys with the guns feel threatened.

          The second is transferability. Gold is a physical thing, and the limits on its transfer are precisely what has driven the move to paper. As pointed out by another, the blockchain of BTC is equivalent to a database, which means that the CAP theorem applies. In order to function, the blockchain is CP, which means that A is "whatever". Historically, I guess that transactions have taken an hour to settle.

          So if by "digital gold" you mean "a philosophic token which has proven unworkable for general economic use", I can go with that.

          1. doublelayer Silver badge

            Re: So someone steals something that doesnt exactly exist

            The inherent value of a lot of things are overstated. Sure, you can make jewelry out of gold, but if that's the only reason people were using gold, we'd do a lot less mining for gold. If everyone decided tomorrow that gold only has value for the stuff we're going to make out of it, like many other metals, the price would fall quickly. Gold wasn't used as a medium of exchange because there was a lot of demand for jewelry manufacture, but because it was hard to counterfeit, relatively portable, and barter got too complicated. Similarly, fiat currency's value isn't just taxes, but that you can use it to pay people for stuff that you want. In situations where you can't do that, it stops being valuable, even when you can still pay the taxes with it. Countries where the currency has collapsed see the use of other currencies because they're more useful in obtaining needed commodities even when taxes can't be paid in those currencies.

            Bitcoin's not being used as a currency, but not because it doesn't have value. It's not being used as a currency because it's crap at being a currency. It is not accepted in many places, so you can't use it exclusively. Typical transactions are costly and slow, which doesn't apply to used payment methods. The value jumps around all the time, which while better than something that's always inflating, means that people can't be sure of price stability. For these reasons, those who have Bitcoin tend to treat it more as an investment commodity than as cash, which exacerbates a few of these problems.

          2. SundogUK Silver badge

            Re: So someone steals something that doesnt exactly exist

            Nothing has 'inherent' value. Somethings value is what people are prepared to pay or trade for it.

          3. Michael Wojcik Silver badge

            Re: So someone steals something that doesnt exactly exist

            In order to function, the blockchain is CP, which means that A is "whatever".

            It aims for CP, but a number of experiments have shown it's quite vulnerable to partitioning attacks, partly due to the concentration of mining among relatively few parties.

    2. iron Silver badge

      Re: So someone steals something that doesnt exactly exist

      > Currency is based on gold assets held by the state.

      Lol no it doesn't and hasn't for a long time. UK, USA and most (all?) other countries stopped using the gold standard many decades ago.

      In the case of the USA it was FDR who ended the gold standard in 1933!

      Unfortunately you didn't learn that from your Douglas Adams???

    3. Androgynous Cow Herd

      Re: So someone steals something that doesnt exactly exist

      <quote>So the only loser is those holding fake currency.

      Currency is based on gold assets held by the state.</quote>

      Ahhh- a Time traveller for a time before Nixon! this is an honor!

    4. DevOpsTimothyC Bronze badge

      Re: So someone steals something that doesnt exactly exist

      Go look up The Bretton Woods agreement. It's from 1944.

      1. Androgynous Cow Herd

        Re: So someone steals something that doesnt exactly exist

        Yup - Bretton Woods 1944 tied world currencies to the US dollar, which was tied to the value of Gold at the time.

        1971 - Nixon "Temporarily" suspended convertibility of US Dollar to Gold.

    5. Claptrap314 Silver badge

      Re: So someone steals something that doesnt exactly exist

      Nah, brah. That's $415M worth of nothings. (As of the moment the news came out.)

    6. Baximelter

      Re: So someone steals something that doesnt exactly exist

      > ". . . leaves as currency . . ."

      You should see my stock of cowry shells!

  3. xyz123

    The mega-millionaire gary gensler (head of the SEC and now 'somehow' worth $119million after refusing to investigate the SEC itself for taking bribes from FTX) will chip in soon to say the money is "gone forever, oh well never mind".

    Same for the top brass at the FBI. they've been bribed to hell and back and are worth 10s to 100s of millions each "somehow" but no-one is investigating.

    SBF will get 'house arrest" for 1-2years and be free to keep the remainder of the "unlocated" funds.

    1. Yet Another Anonymous coward Silver badge

      But how is Area 51, Hunter Biden's laptop and Hillary's emails involved ?

      1. Michael Wojcik Silver badge

        Bitghazi!

  4. Howard Sway Silver badge

    $415 million stolen in a November hack is still missing

    But hey, let the guy who's accused of running the whole scam out on parole and live as comfortably as possible with internet access (as proved by his "blog posts"). He'd never be able to use his inside knowledge to shift any cash about or cover his tracks or anything like that.

    Did it ever occur to them that persuading him to reveal what really happened and where the money went might have been a little easier if he'd been kept in a cell and he'd started to realise that the only way of reducing the length of his stay was to co-operate rather more enthusiastically?

    1. Jedit Silver badge
      Stop

      "might have been a little easier if he'd been kept in a cell"

      Sure, and wouldn't it also be easier to get confessions out of prisoners if we tortured them?

      Don't get me wrong here - you're entirely correct that SBF is a scamming piece of shit who deserves to spend longer in prison than he probably will. But he hasn't been convicted of a crime yet, and until he has been convicted he's protected by rules that also protect the rest of us from the authorities just doing whatever they like to anyone who stands accused. That's important.

      And of course, we should remember that SBF being out on license is an invitation to dig his eventual hole even deeper. If he had any sense he'd be staying the hell off the internet, but he does not have sense and he will almost certainly do or say something that he shouldn't have - if he hasn't already.

      1. Howard Sway Silver badge

        Re: "might have been a little easier if he'd been kept in a cell"

        Steady on, all I suggested was he was remanded in custody until trial, which is normal practice here in Britain when people are accused of crimes as big as this.

        Why should the taxpayers stump up for constant surveillance of him whilst he's free to use his computer all day? If he'd nabbed tons of gold bullion they wouldn't let him live in a house equipped with forges, ingot moulds and shovels.

        1. The Oncoming Scorn Silver badge
          WTF?

          Re: "might have been a little easier if he'd been kept in a cell"

          Bail is a monetary incentive to return to court; parole is an early release incentive for good behavior.

          Isn't he out on bail, not parole.

        2. General Purpose Silver badge

          Re: "might have been a little easier if he'd been kept in a cell"

          >remanded in custody until trial, which is normal practice here in Britain when people are accused of crimes as big as this

          Not really. Bail in the UK depends on various things - possibility of re-offending or interfering with the investigation or judicial process, risk of not turning up for trial, and suchlike. The simple magnitude of an alleged theft or fraud isn't an issue, so it can even seem perverse when bail's refused to a poor man accused of burglary to feed his drug habit, but granted to a rich man accused of massive fraud.

          Keeping the accused in prison in the hope he might crack and confess isn't an option in UK law.

        3. Snowy Silver badge
          Coat

          Re: "might have been a little easier if he'd been kept in a cell"

          Locking him away may cost more than letting him out and keeping him constantly under surveillance?

  5. vtcodger Silver badge

    Easy come,Easy Go

    Have these folks considered the possibility that the $415M simply returned to the nothingness from which it was summoned? Stuff like that apparently happens all the time in the domain of quantum mechanics. Perhaps they need a physicist rather than more/better accountants.

    1. jmch Silver badge

      Re: Easy come,Easy Go

      Well, it happens in 'real' finance as well...

    2. Anonymous Coward
      Anonymous Coward

      Little high, little low

      Any way the wind blows ...

      1. First Light Silver badge

        Re: Little high, little low

        Life had just begun,

        And now I've gone and thrown it all away ...

  6. Anonymous Coward
    Anonymous Coward

    How is he even permitted to use a computer and the internet as part of his bail conditions? He's a fucking cryptofraudster.

    This would be like letting a pedophile live in a house full of children while on bail.

    1. Yet Another Anonymous coward Silver badge

      >How is he even permitted to use a computer and the internet as part of his bail conditions?

      They didn't even make him do a pinkie-swear ?

    2. JimC

      > How is he even permitted to use a computer and the internet

      And of course none of us think that the FBI are keeping a very close watch on what he's doing with secret spying tools none of us believe they have.

  7. spireite Silver badge

    Crypto investors hyping

    This is entirely to do with the fact they've been caught with their pants down, and they can feel the lube being applied.

    Now they have no option but to hype it even more and try to bring other suckers in to transfer the bag to.

    Crypto has become even more snake-oil than it was before.

    Last night I watched a Netflix series Trust No One: The search for the crypto king - all about the Canadian Exchange QuadrigaFx.

    The suckers...er.. sorry, punters.... on the program received no sympathy from me. One guy lost a s'load, he sold his apartment for 400K and put his 400K into Bitcoin through QuadrigaFx as a transit mechanism because the 'cut' was cheaper than a standard bank transfer.

    When he tried to withdraw.... nope, not happening... he's screwed.

    1. Throatwarbler Mangrove Silver badge
      Alert

      Re: Crypto investors hyping

      Au contraire, the dildo of consequences seldom arrives lubed.

  8. captain veg Silver badge

    "$1.7 billion in cash, $2.5 billion in crypto, and $300 million in securities had been recovered so far."

    So that's $1.7 billion actually recovered.

    -A.

  9. OldCrow 1975

    I hope SBF and his associates are not allowed anywhere near FTX in any capacity,

    If FTX is to survive. SBF and his girlfriend and accomplices are never to be allowed anywhere near FTX or even a computer for that matter. If it was up to me I would not allow them access to a lego set,

  10. Anonymous Coward
    Anonymous Coward

    Oh no

    What happened to my magic beans?

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