The hacker who stole more than $447 million worth of crypto from the defunct FTX exchange in November 2022 has been converting their loot into different currencies, including Bitcoin (BTC). According to blockchain analysts, the hacker has converted 75,600 ETH (worth about $95 million) to BTC through a network called Railgun1.
Railgun is a privacy-preserving protocol that allows users to send and receive ERC-20 tokens without revealing their identity or transaction details. Railgun uses zero-knowledge proofs and smart contracts to ensure that transactions are valid and secure, while hiding the sender, receiver, and amount of tokens transferred2.
The hacker has been using Railgun to swap ETH for BTC through various decentralized exchanges (DEXs), such as Uniswap and SushiSwap. The hacker then transfers the BTC to other wallets or exchanges, making it harder to track their movements. The hacker has also used other bridging protocols, such as THORChain and RenVM, to convert ETH to BTC3.
The hacker’s motive for converting ETH to BTC is unclear, but some possible reasons are:
- To diversify their portfolio and hedge against the volatility of ETH.
- To take advantage of the price difference between ETH and BTC on different markets.
- To evade detection and confiscation by law enforcement or FTX.
The hacker still holds a large amount of ETH in their wallets, as well as other tokens that they stole from FTX, such as Dai, USDC, USDT, and Wrapped Bitcoin (WBTC). The hacker has been splitting their ETH stash across multiple wallets, each holding 15,000 ETH4. The hacker is now one of the world’s largest holders of ETH, ranking 35th on the list of top ETH addresses.
The hacker’s identity and whereabouts remain unknown, despite the efforts of FTX, Kraken, and other crypto exchanges to cooperate with law enforcement and freeze the hacker’s funds. The hacker has also taunted FTX and its founder Sam Bankman-Fried by sending them messages through transactions on the blockchain. The hacker has claimed that they exploited a vulnerability in FTX’s smart contracts that allowed them to drain the exchange’s wallets.
FTX was a crypto exchange that offered leveraged trading, futures contracts, and options on various cryptocurrencies. The exchange collapsed on November 12, 2022, after suffering a massive hack that resulted in the loss of over $663 million worth of crypto. FTX filed for bankruptcy on November 15, 2022, leaving more than one million creditors wondering if they will ever get their money back.