FTX hack victim Paxos recovers $20 million in gold tokens

Tokens worth $20 million were stolen from FTX in November, but Paxos, a blockchain and trust company, was able to recover them from the wallets of the unknown hacker. Shortly after Sam Bankman-Fried's failed exchange filed for Chapter 11 bankruptcy protection last month, it was exploited to the tune of $400 million. Paxos Gold (PAXG) tokens were taken, backed by physical gold stored in Paxos's vault. As soon as Paxos discovered that four wallets were under hackers' control, they froze 11,184 Paxos Gold (PAXG), worth approximately $20 million. It took the team about six weeks, but they finally got the property back. On-chain information obtained by security firm PeckShield indicates that Paxos transferred the stolen tokens from addresses flagged as “FTX Accounts Drainer” by Etherscan to a null address and burned them yesterday. Afterward, it reclaimed the original amount by minting a duplicate into a different wallet.

Even so, the loot recovered from Paxos is only a fraction of the theft. The FTX drainer wallet once contained $302 million in ether, all of which belonged to the FTX reserves and were subsequently sold off for bitcoin. In prepared testimony, new FTX CEO John Ray III admitted the company had unencrypted private keys to its wallets and implemented very lax security controls, which could have contributed to the hack.