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(Kitco News) – The fallout from the collapse of FTX has been profound and far-reaching with no signs of letting up anytime soon as the contagion continues to spread.
Ethereum (ETH), the top altcoin and leading smart contract platform, is currently feeling the heat as the so-called ‘FTX hacker’ has been selling large amounts of Ether on the open market in a seeming attempt to cover their tracks and increase their Bitcoin (BTC) holdings.
As previously covered by Kitco Crypto, the hacker achieved a level of notoriety last week when they became the 27th largest Ethereum holder as they converted their ill-gotten gains to the proof-of-stake network.
Now it appears that they are once again making moves, this time opting to increase their stash of BTC at the expense of Ether.
On-chain data shows that on Sunday the hacker transferred 50,000 ETH to a new address and then proceeded to swap it for renBTC, a wrapped version of BTC capable of operating on the Ethereum network.
FTX Wallet Drainer is now the 37th largest holder of ETH
Dropped 10 places after transferring 50,000 ETH to 0x866E this morning 👀
We’re also continuing to see ETH swapped for renBTC in 0x866E
Wallet currently holds ~1127 renBTC and ~19k ETH pic.twitter.com/sPJjtoWwud
— CertiK Alert (@CertiKAlert) November 20, 2022
The renBTC was then bridged back over to the Bitcoin blockchain, where the hacker deposited the newly acquired renBTC in two separate wallets.
According to the crypto analytic group CertiK, the addresses in question are using a money laundering technique known as peel chain to launder the renBTC.
The process involves “peeling” a small portion of a cryptocurrency held in low value transfers and repeating the process numerous times. Funds are typically then sent to exchanges where they are converted for other crypto assets or fiat currency.
As a result of the Ether selling to acquire renBTC, the price of the top altcoin has plummeted 9.8%, falling from $1,220 to support at $1,100 where bulls are now attempting to prevent further losses.
ETH/USD 4-hour chart. Source: TradingView
The second largest crypto by market cap is not out of the woods yet as the hacker still possesses more than 200,700 Ether in their wallet. With prices continuing to show signs of weakness in the face of multiple headwinds – such as the bankruptcy rumors surrounding the crypto lender Genesis – there remains a good chance that additional token dumps are coming.
While some have speculated that the Bahamian government was behind the hack, it would be highly unusual for them to implement a peel chain to convert the funds, which suggests that another party is behind these developments.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.