QUICK TAKES:

  • FTX drainer holds large amounts of ETH and BNB digital assets

  • The attacker has been swapping BNB and DAI for ETH, becoming Ether’s 34th largest holder

  • The move is proving to be beneficial for arbitrageurs leveraging the price fluctuation 

The recent FTX meltdown was known to create a massive shift in the market but it seems that it is providing a safe passage for hackers to conduct mischief. Immediately after FTX filed for bankruptcy last week, $400 million was withdrawn from the crypto exchange without any account. Speculations of the platform getting hacked were soon raised and crypto sleuths have been keeping track of the funds since.

The crypto analyst account, Lookonchain, which has been observing the activity of the FTX drainer’s account, recently reported another movement. After a significant shift of funds, the FTX drainer is now the 34th-largest holder of ETH after becoming the 10th-largest holder of BNB.

The FTX exploiter, who has been dumping all other drained assets for ETH, is now one of the largest holders in the world, with 228,523 ETH ($284.82m) currently in their wallet.

Everyone should keep an extremely close eye on what happens next… pic.twitter.com/SAP3UkyVaa

— Dylan LeClair 🟠 (@DylanLeClair_) November 15, 2022

Till yesterday, the account held 228,524 ETH worth $288 million and 108,454 BNB worth $30 million. However, earlier today, it swapped a total of 34,000 BNB for 4,500 ether and three million Binance USD (BUSD). Additionally, it holds at least $322 million in cryptocurrencies, 87.5% of which is made up of ETH.

The firm has raised speculation that the drainer’s next move might be to swap the remaining BNB and an additional 1.7 million DAI stablecoins it held for ETH. If the move happens, it would be beneficial for arbitrageurs as they will be to purchase BNB from the same pool only to sell it at a profitable margin. However, they might face interference from HODLers who are hopeful for a positive shift in the market. 

Is ETH Dump Incoming?

Nevertheless, arbitrageurs have already jumped at the opportunity, with one recently making a profit of over $50,000. This is after the FTX account drainer dumped 10,000 BNB worth $2.8 million into the ‘0x74e4’ pool yesterday. At the same time, Lookonchain noticed that a bot exchanged 450 ETH for 2,390 BNB from the same pool.

The bot then dumped 2,185 BNB for 452 ETH back through another pool ‘0x5bf6’ pool. This allowed the trading bot’s owner to make an arbitrage profit of 208 BNB, which was worth $56,790 at press time. 

Analysts are still determining the FTX drainer‘s next move as the account is currently holding over 233,000 ETH. They speculated that hackers would usually deposit the funds into Tornado Cash crypto mixer, but it won’t be possible this time.

This is after the U.S. Treasury Department announced sanctions against Tornado cash earlier this year. Therefore, the attacker won’t be able to deposit such a huge amount without getting monitored. It also will not be possible as Tornado cash is currently holding 95,562 ETH, which is way lesser than the drainer’s account. This would make it impossible to evade suspicion while depositing huge troves of ETH on Tornado.

What’s in it for Arb Traders? 

The other option for the drainer would be to dump all the $ETH at once, which may cause a huge price fluctuation. Elaborating on the same, Lookonchain wrote, 

In the worst situation, FTX Accounts Drainer shorts $ETH using high leverage, and then dumped 228,524 $ETH ($288M) to drive the price down.

However, traders may find it an ideal opportunity to carry out arbitrage trades as the ETH price fluctuates. Traders can purchase the low-priced ETH dumped by the drainers, and then sell the tokens at a higher price on decentralized protocols and pools.