Sam Bankman-Fried conducted last week’s nine-figure FTX hack under the instruction of the Securities Commission of The Bahamas.
FTX has filed a motion with the court claiming the Commission’s actions were “unauthorized.”
The Bahamian government is now one of the world’s biggest Ethereum holders after converting FTX’s assets.
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After ordering the FTX hack, the Bahamian agency is now one of the world’s largest ETH holders.
Bahamas Government Orders FTX “Hack”
Bahamian authorities ordered Sam Bankman-Fried, previously the main figurehead of the collapsed FTX exchange, to transfer hundreds of millions of dollars of crypto from FTX to a wallet controlled by the Securities Commission of The Bahamas.
The Commission confirmed it ordered the transfer in a Thursday press release. In the statement, the Commission said that on November 12 officials “took the action of directing the transfer of all digital assets of [FTX] to a digital wallet controlled by the Commission, for safekeeping.” The note added that FTX was ordered to move the assets “to protect the interests of clients and creditors.”
FTX filed for Chapter 11 bankruptcy on November 11 after suffering from a bank run and liquidity crisis that shook the entire crypto ecosystem. Following a freeze on customer withdrawals, it emerged that the exchange had a $9.4 billion hole in its balance sheet after lending customer funds to Alameda Research, a trading firm co-founded by Bankman-Fried.
A November 17 filing from FTX argued that the Bahamian government had obtained “unauthorized access” to FTX’s systems by directing Bankman-Fried to transfer the funds.
FTX suffered from a suspected “hack” on November 12 in which over $600 million worth of digital assets were moved to external wallets FTX.US General Counsel Ryne Miller confirmed that some assets had been moved to cold storage “to mitigate damage” following the incident.
After the assets were transferred, they were swapped for ETH. Blockchain security firm Beosin estimates that the Bahamian authority holds over $330 million, making it the 35th biggest Ethereum whale. Most of the funds are currently held in this Ethereum wallet.
Whether the Commission responded appropriately is a matter for the court to decide, but the announcement has sparked controversy within the crypto community.
FTX’s filing added that “the automatic stay has been flaunted, by a government actor no less.” According to U.S. bankruptcy law, the automatic stay provided by Chapter 11 is “a period of time in which all judgments, collection activities, foreclosures, and repossessions of property are suspended.” Given that the funds were moved just hours after the Chapter 11 was filed, it seems that the Commission and FTX overlooked that rule.
Disclosure: At the time of writing, the author of this piece owned ETH and other crypto assets.
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That’s driven lots of new interest to some of the earliest decentralized players. Dan Gunsberg, creator of Solana-based derivatives exchange Hxro, said that in recent weeks he’s seen a boom in interest for his trading platform, which he claims cannot fall prey to the same pain points that felled FTX and its sister company, Alameda.
While bitcoin prices have been lower than the estimated cost of bitcoin production, the network’s hashrate has dropped a great deal since mid-November. Presently, the total hashrate dedicated to the Bitcoin network is coasting along at 236 exahash per second (EH/s) after dropping below the 200 EH/s range six days ago.
Bitcoin’s Hashrate Slips Lower
The first week of November 2022 was brutal for digital currency prices as FTX’s collapse rippled across the entire industry in a negative fashion. Prior to the FTX fallout, bitcoin was trading above the $20K zone and the network’s total hashrate was coasting along at roughly 270 to 290 exahash per second (EH/s) before the blowout.
There was a quick burst of increased hashrate the day after FTX filed for bankruptcy and BTC’s total hashrate tapped an all-time high on Nov. 12, 2022. At block height 762,845, bitcoin miners managed to get the hashrate to briefly rise to a whopping 347.16 EH/s. Since then, the hashrate has divebombed and slid below the 200 EH/s range on Nov. 26.
Presently, bitcoin miners have managed to rise above the 200 EH/s region, to the current 236 EH/s recorded at 10:15 a.m. (ET) on Dec. 2, 2022. The drop in hashrate indicates that unprofitable mining entities have been forced to shut down machines, while only the strong operators survive.
At the time of writing, the estimated cost of bitcoin production ($16,956) is awfully close to the leading crypto asset’s spot market value ($16,897). Previously, the cost of bitcoin production was $18,313 on Nov. 30, which was significantly higher than BTC’s spot market value. With a drop in BTC production costs, it makes it easier for current operators to survive.
Bitcoin miners are also expecting a large mining difficulty reduction between 6.56% to 7.9% lower than today’s difficulty rating on or around Dec. 5, 2022. Presently, the estimated mining difficulty reduction could be the largest difficulty drop the network has seen in 2022. Since Nov. 30, up until Dec. 2, 2022, roughly 80 exahash of hashpower has been removed from the network’s total hashrate.
What do you think about the current state of Bitcoin’s hashrate? Let us know what you think about this subject in the comments section below.
Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
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