Post-mortem FTX: non-existent security for the private keys of its customers

Zero encryption at FTX – According to the testimony of the new CEO of FTX, John Ray IIISam Bankman-Fried and his team would not have not so much concerned about the safety ofare assets that the FTX crypto exchange held.

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Unencrypted private keys: FTX’s cryptos left within everyone’s reach

John Ray III has once again dropped a bombshell on the management of FTX under Sam Bankman-Fried. During his December 13 testimony before the House of Representatives Financial Services Committee, he revealed that previously the crypto exchange stored private keys of its crypto wallets, without encrypting them.

Such recklessness then exposed “hundreds of millions of dollars” theft. Speaking to The Block news outlet, the CEO of non-custodial wallet provider Casa, Nick Neuman, indicated that in the absence of encryption, « any employee » or « any external actor » who could access FTX’s system could have transferred or stolen the company’s client funds « relatively trivially ».

With its unencrypted private keys, FTX would therefore have facilitated the work of hackers?

This surprising news about the safety of FTX holdings adds to other revelations from John Ray about the catastrophic management of the crypto exchange before its collapse. During his speech, the new CEO of FTX told the committee that he had taken the necessary measures to secure digital assets of the company, worth more thana billion dollars.

As a reminder, FTX was the victim of a nearly $400 million in cryptocurrencies hacked in November, when the crypto exchange was crashing. This gaps in terms security keys facilitate the realization of this theft?

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