In a shocking turn of events, cryptocurrency exchange FTX faced a double blow as it grappled with bankruptcy and a massive crypto theft that threatened to wipe out its remaining assets. 

Now, new details have emerged about the nightmarish evening when FTX’s staff and a team of consultants raced against time to prevent what could have been a 10-figure heist.

According to a recent report by Wired, it all began on the evening of November 11,  2022, when FTX, already reeling from financial woes, witnessed mysterious outflows of its cryptocurrency stash. 

The company’s exhausted staff watched in horror as hundreds of millions of dollars worth of crypto were stolen in real-time, captured on the Ethereum (ETH) blockchain tracking website, Etherscan.

The situation seemed dire, but little did they know that the worst was coming. FTX’s leadership, under new CEO John Ray III, quickly assembled a group of more than 20 staff members, bankruptcy lawyers, advisers, and consultants for an urgent Google Meet video call. 

The participants could witness the draining of FTX wallets in real-time, but they lacked crucial information about the storage and security measures employed by the company.

With the clock ticking, FTX’s Chief Executive of subsidiary LedgerX, Zach Dexter, embarked on an alternative approach to safeguard the remaining funds. Dexter contacted digital asset trust company BitGo, which had been in talks with FTX for custody of their crypto holdings. 

Dexter requested BitGo to create immediate “cold storage” wallets—offline wallets—for the firm to transfer its remaining funds as a safe haven.

While BitGo worked on preparing the cold storage wallets, the FTX team faced a critical dilemma—where to store the vulnerable funds until the wallets were ready temporarily. 

In a stroke of quick thinking, Kumanan Ramanathan, an adviser from restructuring firm Alvarez & Marsall, offered his personal Ledger Nano hardware wallet as a temporary refuge. 

Ramanathan set up a new wallet on his Ledger Nano, meticulously securing the password, and FTX’s CTO Gary Wang began transferring funds to it.

Minutes later, BitGo notified the FTX team that their wallets were prepared, prompting them to transfer hundreds of millions more in crypto to BitGo’s cold storage. 

Per the report, FTX staff frantically searched every wallet containing the company’s funds throughout the sleepless night, transferring every coin they could find to BitGo.

Meanwhile, Ramanathan possessed approximately $400 to $500 million of FTX’s crypto holdings. To protect the funds, the company’s General Counsel, Ryne Miller, rushed to Ramanathan’s office to ensure security. 

In a bizarre twist, Ramanathan even called the police to report a theft in progress and sought their assistance safeguarding the stash.

Fortunately, the physical threat never materialized, and the siphoning of funds ceased once the money was moved to Ramanathan’s Ledger wallet. 

Eventually, the funds held in Ramanathan’s office were transferred to BitGo, which ultimately secured $1.1 billion of the firm’s remaining assets.

Overall, the actions of consultants, staff, and quick-thinking decisions during that fateful night prevented a potentially catastrophic heist. 

Featured image from Shutterstock, chart from TradingView.com 

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