PANews January 1, 2025 — The Flow Foundation has issued a statement regarding coordination with exchanges following the vulnerability incident on December 27. It stated that it has collaborated with forensic agencies and multiple global exchanges to protect users and restore network operations. The Foundation noted that shortly after the incident, a single account at one exchange deposited approximately 150 million FLOW tokens (about 10% of the total supply) and converted a significant portion of them into BTC. Within a few hours before the network disruption, over $5 million was withdrawn. This process exposed flaws in the exchange's AML/KYC procedures and shifted financial risks to users who unknowingly purchased fraudulent tokens. Forensic analysis also revealed significant abnormal trading activity in the FLOW market on the affected exchange before and after the incident, which deviated from normal trading patterns. The Foundation said it had raised requests for clarification regarding these trading patterns through operational channels, but received no responses.
Flow Foundation Alleges Exchange's AML Failures in FLOW Security Incident
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Summary
The Flow Foundation claims that a major exchange demonstrated weak AML (Anti-Money Laundering) controls during the FLOW security incident on December 27. On-chain analysis revealed that a single account deposited 150 million FLOW (10% of the total supply), converted much of it to BTC, and withdrew over $5 million before the network disruption. The exchange failed to flag this activity, leaving users exposed to fraudulent tokens. Forensic checks also identified abnormal trading patterns in the FLOW market, and the exchange provided no response to the foundation's inquiries.
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