Another well-known cryptocurrency exchange profligate Troubled during last year’s bull run as users questioned their finances – and a parallel to the recent Irresistible Implosion FTX exchange.
But Kris Marszalek, CEO of Crypto.com, says not to worry: everything is solvent and above board.
“Our platform is business as usual,” Marszalek said in the AMA post Twitter on Sunday. “People are depositing, people are withdrawing, people are trading, and pretty much all normal activity is at elevated levels.”
Marszalek takes part in AMA to address weekend revelations about exchanges that were apparently unintentional $400 million sent To the rival exchange Gate.io at the end of October. The timely return of funds to Crypto.com’s “proof of reserves” raised some doubts.
According to the news, the value of Crypto.com’s tokens has shrunk by 20%, and at least $45 million has since been withdrawn from the exchange. Wall Street Journalas investors recalled the recent FTX crash.
However, Marszalek said it was no big deal and the funds were sent to Crypto.com’s own whitelisted company account on Gate.io.
“There is no risk of these funds being lost,” he said. “The system does not allow us to send money where it cannot be recovered.”
Crypto.com and FTX
Marszalek also took the opportunity to reassure investors more generally of Crypto.com’s accounting practices.
Unlike FTX, he said, which traded user funds Crypto.com uses its own highly volatile tokens as collateral for deposits, holding client assets one-to-one – either the relevant token or fiat currency, and that’s it.
“We don’t trade client assets,” he said, adding that mixing client and company money was a “terrible idea” and should be “outlawed”.
If true, this means that Crypto.com’s solvency is independent of asset prices; deposits and withdrawals should be unaffected in the event of a crash.
This is also why the exchange’s reserves show 20% stake in SHIB, a cryptocurrency based on the dog meme, Marszalek said. The CEO explained that the reason is simple – the coin was the “hot meme coin” last year, so many people bought it.
“We store what customers buy,” he said. “As long as our users hold it, we will hold it. We have no control over what you buy.”
What about FTX? Is Crypto.com hurt by the crash?
No, Marszalek said, claiming that Crypto.com was exposed to The crash of FTX is the smallest.
The exchange was able to recoup the lion’s share of its $1 billion investment, losing just $10 million, he said.
He added that Crypto.com is fully regulated in the UK, EU, US, Canada and Singapore, and said a full, professional audit is underway – although it could take 30 days or more, as a serious audit “would not be of use to the Encryption operates “speed,” he warned.
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