Crypto.com CEO reassures worried customers: After the fall of FTX, people have been in a panic. The collapse devastated the crypto industry, but more than that, it has shaken people’s confidence. Now, customers are wondering who will be next, and some are worried that it will be Crypto.com.
Similarities between Crypto.com and FTX: Crypto.com customers are worried because of the similarities between the two exchanges, which include the following:
- The exchange has taken a flashy approach to its marketing and endorsements
- It is privately held and located outside of the US
- It offers various products focused on buying, selling, trading, and storing crypto
- It ranks as a top global exchange, despite being smaller than FTX
Why are people worried? FTX’s rapid fall due to liquidity issues has people spooked and unsure whether other exchanges can honor withdrawal requests. Moreover, there has been speculation that Crypto.com is experiencing problems, especially after the revelation of a major mistake by the exchange.
Crypto.com’s mistakes: Recently, it came to light that Crypto.com made a major mistake in October, sending over 80% of its Ether holdings to another crypto exchange called Gate.io. While the mistake was quickly rectified, the clerical error saw around $416 million in cryptocurrency moved to the wrong address.
- The transaction was exposed during a show of transparency by CEO Kris Marszalek, where he posted Crypto.com’s cold wallet addresses to show what the company did with its funds.
- After the transaction was exposed, Marszalek owned up to the mistake. He said the currency was meant to go to the company’s cold wallets but was accidentally sent to a “whitelisted” address belonging to a corporate account at Gate.io.
- The full amount was recovered, with the currency going into two of the company’s wallets.
Crypto.com made another error in August when it transferred a refund of $7.2 million instead of $68 to a customer. The exchange is currently suing in an attempt to get the money back.
Customers are not confident: Despite reassurances that the exchange is operating normally, customers have not been convinced. Many have still taken to withdrawing funds, frightened that the same thing that happened to FTX will happen to Crypto.com.
- Some users have speculated that the transfer was done to alter the proof of reserves many exchanges have promised to reassure customers after FTX’s collapse.
- Crypto.com is not the only exchange facing serious outflow, with many fleeing from exchanges with their assets. Between November 6th and November 13th alone, users pulled around $3.7 billion in Bitcoin (BTC), $2.5 billion in Ether (ETH), and $2 billion in various stablecoins.
Crypto.com is already seeing the effects: Since doubt about the company spread, things have started to go downhill. Not only have customers been withdrawing assets, but the native Cronos token (CRO) has dropped significantly in value. The fall of the token adds one more similarity between Crypto.com and FTX, with one sign of its looming crisis being the decline of the FTT token.
People warn against Crypto.com: It does not help the exchange that several people have spoken out. Adam Cochran, a blockchain investor, advised people to get their money out of the company immediately. He said, “If they are full reserves they shouldn’t care if you sit on the sidelines for a week, but their handling of this hasn’t met the bar.”
Another outspoken individual has been Binance CEO Changpeng “CZ” Zhao, who was vocal about FTX before and after its fall. He alluded that suddenly moving large amounts of crypto was a “sign of problems” and told people to “stay away.”
Crypto.com CEO remains positive: Marszalek remains positive, remarking Monday that things were “business as usual” with deposits. He has also commented that the platform has stabilized since the FTX collapse.
Spencer Hulse is a news desk editor at Grit Daily News. He covers startups, affiliate, viral, and marketing news.