Paxos Reclaims $20 Million in PAXG from FTX Hack
Paxos has successfully reclaimed 11,184 Paxos Gold (PAXG) tokens, valued at $20 million, thanks to their swift action in freezing assets during the FTX hack in November.
As Coin68 reported, on the morning of November 12, the FTX exchange experienced a massive withdrawal event, with up to $400 million in various cryptocurrencies leaving the platform. Although the identity of the perpetrator remains unconfirmed, there is speculation that it might have been an "inside job" since it occurred just one day after the exchange filed for bankruptcy.
Among the stolen assets were Paxos Gold (PAXG) tokens, which are gold-backed assets held by Paxos. Upon realizing the attack, the trust company quickly froze 11,184 PAXG tokens (worth $20 million) from four wallets that had been compromised by hackers. As a result, about six weeks later, Paxos successfully reclaimed the entire amount.
Specifically, Paxos recovered the assets by transferring the stolen PAXG tokens from addresses labeled as "FTX Accounts Drainer" by Etherscan to a null address and then burning them. They subsequently minted the same amount of tokens to a new wallet, thus completing the asset recovery process.
However, the recovered amount represents only a small fraction of the total stolen. At one point, the attacker’s FTX wallet held up to $302 million in ETH, much of which belonged to FTX’s reserves. The stolen ETH was swapped for BTC and then funneled through the ChipMixer, making it irretrievable.
The situation remains unresolved. New FTX CEO John Ray III revealed that FTX stored its private keys in unencrypted wallets and implemented very poor security controls, which facilitated the hack. He described FTX as "an unprecedented failure" and the most challenging case he has encountered in his over 40-year career.
