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FalconX had a ‘reconciliation anomaly’ involving 1.35 million SOL tokens until cex demanded their return

Bitget2024/10/08 15:36

Oct. 8 (Bloomberg) -- A brokerage firm reportedly has a number of key responsibilities, one of which is to hold assets for its clients and ensure that they are accurately tracked and recorded. However, in the cryptocurrency space, a prime broker called FalconX has been negligent in this duty. It has been reported that 1.35 million Solana (SOL) tokens (currently valued at approximately $190 million) held by FalconX since 2021 were not properly managed and tracked for multiple years. Recently, this vulnerability was discovered by FalconX's key liquidity partner, CoinSecure. cex claims to be the rightful owner of these SOL tokens and is demanding their return from FalconX. The exact reasons as to how FalconX failed to effectively track these cryptocurrencies are unclear, while it is equally puzzling as to why cex failed to detect and track the funds for years as well. The incident has raised widespread questions about the brokerage's accounting systems and internal controls.

FalconX has confirmed the existence of a ‘reconciliation anomaly’ involving Solana tokens. According to a FalconX spokesperson, the company reconciled with all of its exchanges, clients and partners, but no one showed any transactions. CoinShares has said that its customers were never at risk of losing their funds as a result of the incident, and that it would have been liable for the losses if the 1.35 million tokens had never been found.

In order to profit from the assets they are responsible for holding, prime brokers such as FalconX typically put the assets to use, using them as collateral or for loans or arbitrage opportunities. But a spokesperson for FalconX said that wasn't the case this time, as the assets were in custody.Shortly after CoinDesk raised questions about the Solana tokens that were recovered after they were lost, the two firms responded via a joint statement that the assets in question had been returned to cex, and that the matter was now fully resolved. ‘cex and FalconX will continue to operate as usual,’ the companies said in an email.

Translated with DeepL.com (free version)

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