SBF Says FTX to Provide Around $6 million Compensation to Phishing Victims

SBF Says FTX to Provide Around $6 million Compensation to Phishing Victims.

A cryptocurrency exchange will compensate victims of a phishing scam by providing around $6 million in compensation. Hackers were able to transact unauthorized trades on certain accounts of FTX users thanks to the scam.

FTX SBF To Provide Compensation To Phishing Victims

On Oct. 23, FTX founder and CEO Sam Bankman-Fried tweeted that the exchange normally doesn’t compensate its users who are “phished by fake versions of other companies in the space,” but that it would in this case.

Bankman-Fried said this was a special instance and FTX would not repeat it in the future. “THIS IS NOT A PRECEDENT,”  he clarified, explaining that only FTX users would be reimbursed.

Read More: US Courts Approves The First Deal Between FTX and Troubled Digital Asset Lender Voyager

“But this once, we’ll do it; roughly $6m total. (To be clear, only for FTX accounts!  Hopefully other exchanges will comp theirs.) BUT AGAIN NOT A PRECEDENT, WE WILL NOT GOING FORWARD,” he said on his Twitter account. 

14) But this once, we'll do it; roughly $6m total.

(To be clear, only for FTX accounts! Hopefully other exchanges will comp theirs.)

BUT AGAIN NOT A PRECEDENT, WE WILL NOT GOING FORWARD.

— SBF (@SBF_FTX) October 23, 2022

The Chronology

Phishing attacks recently led to attackers gaining application programming interface (API) keys for user accounts, enabling them to make unauthorized trades on crypto exchanges.

Previously, 3Commas was alerted to unauthorized trading by some of its users, which led to the discovery of the attack on October 21.

To avoid further losses, FTX and 3Commas suspended the suspicious accounts and disabled all compromised API keys following an initial investigation.

Read More: FTX CEO SBF Responses to Twitter Critics Regarding His Crypto Standard Proposal 

A blog post by Bankman-Fried on Oct. 19 outlined his thoughts on crypto regulation, which included a proposal he called the “5-5 standard,” in which hackers would keep either $5 million or 5% of their stolen funds.

According to his most recent tweet thread, he is asking the hacker to return 95%, approximately $5.7 million, of the stolen funds within 24 hours, saying, “we’ll absolve them.”

The crypto community has dubbed October “hacktober” since Chainalysis reported on Oct. 13 that October 2022 has been the “biggest month” in hacking activity ever.