FTX was engulfed in more chaos on Saturday when the crypto exchange said it had detected unauthorised access and analysts said hundreds of millions of dollars of assets had been moved from the platform in "suspicious circumstances".
FTX filed for bankruptcy on Friday, one of the highest profile crypto blowups, after traders rushed to withdraw $6 billion from the platform in just 72 hours and rival exchange Binance abandoned a proposed rescue deal.
FTX Chief Executive John J Ray III said on Saturday that the company was working with law enforcement and regulators to mitigate the problem, and was making "every effort to secure all assets, wherever located."
"Among other things, we are in the process of removing trading and withdrawal functionality," he said.
The exchange's dramatic fall from grace has seen its 30-year-old founder Sam Bankman-Fried, known for his shorts and T-shirt attire, morph from being the poster child of crypto's successes to the protagonist of the industry's biggest crash.
Bankman-Fried, who lives in the Bahamas, has also been the subject of speculation about his whereabouts and he denied rumors on Twitter that he had flown to South America. When asked by Reuters whether he had flown to Argentina, he responded in a text message: "Nope". He told Reuters he was in the Bahamas.
The turmoil at FTX has seen at least $1 billion of customer funds vanish from the platform, sources told Reuters on Friday. Bankman-Fried had transferred $10 billion of customer funds to his trading company, Alameda Research, the sources said.
New problems emerged on Saturday when FTX's US general counsel Ryne Miller said in a Twitter post that the firm's digital assets were being moved into so-called cold storage "to mitigate damage upon observing unauthorised transactions."
Cold storage refers to crypto wallets that are not connected to the internet to guard against hackers.
Blockchain analytics firm Nansen said it saw $659 million in outflows from FTX International and FTX US in the last 24 hours.
A separate blockchain analytics firm Elliptic said that around $515 million worth of cryptoassets were "suspected to have been stolen," while $186 million were likely moved into secure storage by FTX.
Crypto exchange Kraken said: "We can confirm our team is aware of the identity of the account associated with the ongoing FTX hack, and we are committed to working with law enforcement to ensure they have everything they need to sufficiently investigate this matter."
FTX was not immediately available for comment about the outflows or Kraken's statement.
In its bankruptcy petition, FTX Trading said it has $10 billion to $50 billion in assets, $10 billion to $50 billion in liabilities, and more than 100,000 creditors. Ray, a restructuring expert, was appointed to take over as CEO.
A document that Bankman-Fried shared with investors on Thursday and was reviewed by Reuters showed FTX had $13.86 billion in liabilities and $14.6 billion in assets. However, only $900 million of those assets were liquid, leading to the cash crunch that ended with the company filing for bankruptcy.
The collapse shocked investors and prompted fresh calls to regulate the crypto asset sector, which has seen losses stack up this year as cryptocurrency prices collapsed.
"Things will continue to simmer after the FTX crash," said Alan Wong, operations manager of Hong Kong Digital Asset Exchange.
"With a gap of $8 billion between liabilities and assets, when FTX is insolvent, it will trigger a domino effect, which will lead to a series of investors related to FTX going bankrupt or being forced to sell assets."
Crypto market maker Jump said on Twitter late on Saturday that it had an undisclosed exposure to FTX, adding that the firm remains well capitalised.
Since its founding in 2019, FTX had raised more than $2 billion from top investors including Sequoia, SoftBank, BlackRock and Temasek. In January, FTX had raised $400 million from investors at a $32 billion valuation.
SoftBank and Sequoia Capital said they were marking their investments in FTX down to zero.
Cryptocurrency exchange Coinbase Global Inc will also write off the investment its ventures arm made in FTX in 2021, according to a person familiar with the matter.
Bitcoin fell below $16,000 for the first time since 2020 after Binance abandoned its rescue deal for FTX on Wednesday.
On Saturday it was trading around $16,800, down by more than 75% from the all-time high of $69,000 it reached in November last year.
FTX's token FTT plunged by around 91% this week. Shares of cryptocurrency and blockchain-related firms have also declined.
"We believe cryptocurrency markets remain too small and too siloed to cause contagion in financial markets, with an $890 billion market cap in comparison to US equity's $41 trillion," Citi analysts wrote.
"Over four years, FTX raised $1.8 billion from venture capital and pension funds. This is the primary way financial markets could suffer, as it may have further minor implications for portfolio shocks in a volatile macro regime."
The US securities regulator is investigating FTX.com's handling of customer funds, as well its crypto-lending activities, a source with knowledge of the inquiry said.
Hedge fund Galois Capital had half its assets trapped on FTX, the Financial Times reported on Saturday, citing a letter from co-founder Kevin Zhou to investors and estimating the amount to be around $100 million.