FTX Hack Was Not an Inside Job: US Prosecutors Charge 3 for SIM-Swap Fraud

The US federal prosecutors charged three individuals last month for their involvement in a $400 million hack of crypto exchange FTX using the SIM-swap technique. Although the court documents filed on January 24 named the crypto exchange "Victim Company-1," a Bloomberg report confirmed it to be FTX.

SIM-Swap Attackers Were behind FTX Hack

According to the charges by the Department of Justice, the three individuals, Robert Powell, Carter Rohn, and Emily Hernandez, carried out SIM-swap attacks and stole the identities of 50 victims between March 2021 and April 2023.

SIM-swapping is an infamous technique used by criminals to gain control of victims' phone numbers and thus access online accounts. The perpetrators convince the telecom operators by impersonating the identity of the real phone number holders. Recently, the US securities market regulated became the victim of such SIM-swap attack as its official Twitter account was compromised.

The lawsuit alleged that, on November 11, 2022, Hernandez impersonated the identity of an FTX employee to gain access to the FTX wallets and siphoned $400 million worth of cryptocurrencies.

Part of the siphoned funds were funneled through the crypto exchange Kraken, while the rest were moved through different bridges and blockchains.

Mystery Solved

FTX was hacked hours after the exchange and its affiliates filed for bankruptcy in the United States. The funds were siphoned after the shady business practices of its former CEO, Sam Bankman-Fried, surfaced. Bankman-Fried, who also stepped down at the same time, speculated the possibility of the hack to be an inside job.

Bankman-Fried has since been convicted of seven counts of criminal charges of fraud and money laundering and is now looking at a maximum prison time of 115 years.

Meanwhile, the bankruptcy administration of FTX is preparing to repay creditors in full. The collapsed exchange also sold a significant portion of its digital assets holdings and now holds about $4.4 billion in cash reserves. However, there is no plan for restarting the offshore unit of the exchange.