Paxos recovers $20 million in gold tokens stolen in the FTX hack

Paxos, a blockchain and trust company, has successfully reclaimed $20 million worth of gold tokens held in the wallets of an unknown attacker who hacked FTX in November.

Sam Bankman-Fried's failed exchange was exploited to the tune of $400 million shortly after it filed for Chapter 11 bankruptcy protection last month. Among the stolen assets were Paxos Gold (PAXG), tokens that are backed by real gold in Paxos' custody.

Paxos quickly froze 11,184 Paxos Gold (PAXG) worth $20 million from four hacker-controlled wallets. Now, about six weeks later, the team has fully reclaimed the assets.

Paxos acted yesterday to move the stolen tokens from addresses labeled as “FTX Accounts Drainer” by Etherscan to a null address and burned them, security firm PeckShield noted based on on-chain data. After this, it minted the same amount into another wallet, thus finishing the reclamation process. 

Still, the Paxos recovery represents only a small portion of the heist. At one point, the FTX drainer wallet held $302 million in ether alone belonging to the FTX reserves, almost all of which were sold off for bitcoin and could not be recovered.

The new FTX chief John Ray III revealed in prepared testimony that FTX stored private keys to its wallets in an unencrypted manner, and had adopted very poor security controls — factors that could have easily allowed the hack to have taken place.