Law enforcement

Crypto exchange Kraken freezes accounts related to FTX and Alameda

Kraken said it froze account access to certain funds “we suspect to be associated with ‘fraud, negligence or misconduct’ related to FTX.”

United-States-based cryptocurrency exchange Kraken has frozen the accounts associated with “FTX Group, Alameda Research, and their executives,” on its exchange after engaging with authorities.

In a Twitter post on Nov. 13, Kraken said the accounts were frozen “to protect their creditors” and added it “maintains full reserves” and other users’ funds aren’t affected, likely seeking to stamp out fears from users that the exchange might face liquidity issues due to the fund freeze.

Kraken has spoken with law enforcement regarding a handful of accounts owned by the bankrupt FTX Group, Alameda Research and their executives. Those accounts have been frozen to protect their creditors.

Other Kraken clients are not affected. Kraken maintains full reserves.

— Kraken Exchange (@krakenfx) November 13, 2022

A Kraken spokesperson told Cointelegraph that it had “actively monitored recent developments with the FTX estate” and “are in contact with law enforcement,” saying it froze account access to certain funds “we suspect to be associated with ‘fraud, negligence or misconduct’ related to FTX.”

“We will resolve each account on a case-by-case basis and may seek guidance from the Bankruptcy Court or trustee as appropriate,” the spokesperson added.

Kraken’s account freeze comes after crypto exchange FTX announced on Nov. 11 that FTX Group consisting of roughly 130 companies including its sister trading firm Alameda Research filed for Chapter 11 bankruptcy in the United States, with its founder, Sam Bankman-Fried, resigning as CEO.

It also follows a suspected hack on FTX that involved a Kraken account, Kraken’s chief security officer Nick Percoco said on Nov.12 that they are aware of the account owner’s identity and later gave an update that FTX would make a statement regarding the situation “and them utilizing funds from their verified [Kraken] account to complete this transaction.”

Regulators appear to be coming down hard on FTX and their executives amid the recent turmoil.

FTX is headquartered in The Bahamas and the country’s securities regulator on Nov. 10 froze the assets of FTX Digital Markets — the exchanges’ Bahamian subsidiary — and its “related parties.”

The Bahamian securities regulator on Nov. 12 denied instructing FTX to prioritize withdrawals of Bahamas-based users after the exchange stated on Nov. 11 that it was instructed by the country’s regulators to facilitate Bahamian withdrawals.

Meanwhile, FTX is now under investigation by the Royal Bahamas Police Force for possible criminal misconduct, according to a Nov. 13 report.

Binance identifies KyberSwap hack suspects, involves law enforcement

Based on an independent investigation, Binance’s security team identified two suspects that may be responsible for orchestrating the virtual heist of $265,000 on KyberSwap.

Helping investigate a $265,000 hack on decentralized crypto exchange KyberSwap, crypto exchange Binance narrowed down two suspects that seem responsible for the attack.

On Thursday, Kyber Network succumbed to a frontend exploit, allowing the attacker to make away with $265,000 worth of user funds from KyberSwap. While investigations were underway, KyberSwap offered a 10% bounty — of roughly $40,000 — to the hacker as means to remediate the situation.

Parallelly, based on an independent investigation, Binance’s security team identified two suspects that may be responsible for orchestrating the virtual heist. Binance CEO Changpeng “CZ” Zhao confirmed that the intel had been sent to the Kyber team.

#Binance security team has identified two suspects for yesterday’s KyberSwap hack. We have provided the intel to the Kyber team, and are coordinating with LE (law enforcement).

Stay #SAFU. https://t.co/tbQBGaGTNG

— CZ Binance (@cz_binance) September 3, 2022

Binance has also begun coordinating with law enforcement as efforts from both ends continue to corner the hackers.

Being the biggest crypto exchange in terms of trading volume, Binance’s proactive and selfless effort to help investors from other ecosystems didn’t go unnoticed, as one of the community members pointed out:

“Binance is now playing the role of a big brother in the crypto space. Binance has gone beyond securing its platform to securing the entire crypto ecosystem.”

If Binance’s investigation checks out, KyberSwap investors may be witness to a rare community-driven hack redemption.

CZ recently retaliated against rumors and false allegations that Binance was a Chinese-based “criminal entity” that “secretly [belongs] in the pocket of the Chinese government.”

While explaining his long-time ties to Chinese entrepreneurs and colleagues, he added:

“The greatest challenge that Binance faces today is that we (and every other offshore exchange) have been designated a criminal entity in China. At the same time, our opposition in the west bends over backward to paint us as a ‘Chinese company.’”

CZ confirmed that Binance has never been legally incorporated in China and never operated like a Chinese company culturally either.