FTX previously stored private keys to crypto wallets without encryption during Sam Bankman Fried's reign, leaving "hundreds of millions of dollars" vulnerable to theft or other malicious activity. The revelation was part of the prepared testimony to the U.S. House Financial Services Committee from from new Chief Executive John Ray III.

“FTX storing private keys unencrypted would allow any employee with internal systems access, or any external actor who is able to obtain systems access, to move, and/or steal, customer funds relatively trivially,” Nick Neuman, CEO at non-custodial wallet provider Casa, told The Block.

Since keys were previously stored unencrypted on FTX, there are a variety of ways in which someone can acquire private keys, such as by hacking into a system or phishing attempts.