:format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/AUKYTAQGJZCDRDXXSLIJQNVPRM.jpg "FTX user appears to be profiting from a botched crypto exchange through the Bahama loophole")
- Argus' analysis revealed unusual trading patterns, showing that "desperate" clients relied on FTX users in the Bahamas to withdraw their funds.
- Some have purchased NFTs that appear to be owned by Bahamian citizens at very high prices. In one case, a digital set that cost $9 three weeks ago sold for $10 million.
- said Owen Rappaport, co-founder and CEO of Argus, a blockchain analytics company.
© Presented by CNBC's Sam Bankman-Fried, CEO of crypto exchange FTX, at the Bitcoin 2021 conference in Miami, Florida on June 5, 2021.It appears that some FTX users have found a way to transfer funds from the exchange through a backdoor in the Bahamas.
Argus' data analysis revealed unusual trading patterns over the past five days as FTX blocked client withdrawals. Most of the deviations are in the numerical groups known as NFTs. According to Argus, the form shows that "desperate" customers are seeking help from FTX users in the Bahamas.
The global cryptocurrency exchange, which has now gone bankrupt, only allowed withdrawals in the Bahamas after FTX liquidations ceased in other parts of the world. The Nassau-based company, which was previously valued at $32 billion, said in a tweet that it had to facilitate the Bahamas' withdrawal in accordance with local law.
High net worth users are paying astronomical prices for NFTs on FTX at a time when the broader market for cryptocurrencies and digital holdings has collapsed. In one case, a shipment worth almost $9 three weeks ago sold on Friday for $10 million. Another NFT was sold at the same price a month ago for $888,888.88 this week.
said Owen Rappaport, co-founder and CEO of Argus, a blockchain analytics company specializing in insider trading.
Argus explains that this type of trading is most likely an attempt by FTX users to access funds in any way possible. One possibility, according to Rapaport, is that sellers have entered into an agreement with users in the Bahamas to pay a certain percentage of the item's value and receive it in return after successfully withdrawing from FTX.
Elsewhere, the trading volume of non-tradable tokens has fallen 97% from an all-time low, according to Dune Analytics. The price of bitcoin has fallen 75% from its all-time high a year ago.
These processes are visible on the blockchain, which acts as a public ledger to track the movement of money. While one can know where the money was transferred, their identity remains anonymous. Argus was unable to verify the identity of this client and FTX appears to have closed the irregular trade on Friday. There are still "deals" or offers to buy these already very expensive collections, but no purchase orders have been filled since then.
FTX and its founder Sam Bankman-Fried did not immediately respond to a CNBC request for comment.
This week, some Twitter users noticed similar deviations. A popular cryptocurrency podcast host named Cobie was one of the first to suggest that users buy NFTs to sell to Bahamian users. This refers to a wallet that withdrew $21 million in Tether from FTX and sent it to an address that appears to be in the Bahamas.
FTX reportedly experienced a mysterious spill after filing for bankruptcy protection. Reuters reported early on Saturday that between $1 billion and $2 billion in client funds "disappeared" from the exchange, citing two people familiar with the matter. Meanwhile, FTX transferred $473 million in the alleged hack, according to Elliptic.
The company filed for Chapter 11 bankruptcy protection on Friday after a tumultuous week. The exchange, run by 30-year-old Sam Bankman-Fried, was accused of stealing money from customers and its biggest competitor almost bought it after a liquidity crisis.