Crypto.com is in the limelight following the revelation that the exchange has transferred over $1 billion USDC to FTX in the past year, one crypto enthusiast revealed.
“They likely fell victim to @SBF_FTX’s incredibly great APR deception. And they figured, “Why not make some decent money from the deposits from the users?”
Crypto.com CEO Kris Marszalek admitted the transfer but said the funds were used to hedge customers’ orders, “We never deployed capital for yield with FTX or any 3rd party”, and that its total exposure to FTX is under $10 million.
Marszalek also stated that 1 billion over a period of a year was “minuscule” compared to its trading volumes.
Crypto Twitter was divided on the statements with some demanding more explanation on the transferred funds.
The other day, the community was alarmed after the exchange allegedly sent 320k ETH to a wallet address linked to Gate.io in late October. Although the platform has recovered the funds, Changpeng Zhao, the CEO of Binance, recommended that customers stay away from it.
The unprecedented fallout of FTX, once deemed as crypto’s bail-out king for its role in the recent crypto meltdown, has raised doubts over the reliability of centralized players.
Crypto.com Claims The Transfer Was A Mistake
To boost confidence amid the FUD, major industry execs began sharing proof of reserves including Crypto.com, which published its wallets and disclosed how much and which cryptocurrency it maintains on behalf of its customers.
However, some experts quickly noted a suspicious transfer of 320,000 ETH to a wallet address connected to Gate.io on October 21, 2022.
Users were more skeptical because the exchange asserted that all user-owned cryptocurrencies are maintained offline in cold storage in collaboration with hardware wallet provider Ledger.
In an effort to contain the damage, CEO Kris Marszalek took to Twitter to say that the transaction was a mistake. “It was supposed to be a move to a new cold storage address, but was sent to a whitelisted external exchange address,” he claimed.
Despite the justification, the move left the crypto community with a negative impression. Many users have questioned how it was possible for $400 million worth of ETH to be unintentionally sent to an address that wasn’t the intended recipient.