After the collapse of FTX, the boss of the exchange took to the internet to assure users.
Kris Marszalek, the CEO of the platform, said in an "AMA" that his company had a strong balance sheet and that it wasn't engaged in the kind of practices that led to the downfall of Sam Bankman- Fried.
Marszalek said that their platform was doing business as usual. There's a lot of normal activity at a heightened level.
Concerns over the company's financial health resulted in a run on the exchange and a plunge in the value of its native FTT token, which led to FTX filing for Chapter 11. FTX tried to reach a deal to be acquired by Binance, the largest venue for trading digital assets, but this fell apart after they backed out citing reports of mishandled customer funds.
FTX's sister company, Alameda Research, borrowed billions of customer funds from the exchange to make sure it had enough funds to process withdrawals, according to CNBC. Bankman-Fried did not comment on the allegations of misappropriating customer funds but did say that it was the result of issues with a trading position.
Marszalek said that the company never took any third-party risks. We do not trade customers' assets. He said that they always had 1 to 1 reserves.
The revelation that $400 million worth of ether was mistakenly sent to Gate.io has raised fears that funds may be at risk.
After the error was identified, they were quickly returned to the original sender. The funds were supposed to be sent to the firm's cold wallet, but were instead moved to a white listed corporate account. Gate.io said in its statement that the transactions were a result of an "operation error transfer."
He said that the white listed address was a corporate account in a 3rd party exchange. The process and systems for managing internal transfers have been strengthened.
That didn't help investor concerns as traders speculated that Crypto.com may be dipping into customer funds after the FTX collapse. Marszalek stated in the AMA that it does not trade customers' assets.
Marszalek said that they would prove the naysayers wrong with their actions.
As we have always done, we will continue to be a safe and secure place where everyone can accessCryptocurrencies.
The analysis shows that the data was shared with CNBC at 7pm. The time is Saturday through Saturday morning. Users withdrew a net $68 million in ether and $120 million in other token from the site. Over that same time period, the website added over $150 million in ether and other digital assets.
Owen Rapaport, co-founder and CEO of Argus, told CNBC that the CEO claims that their assets are backed1:1.
Many exchanges have pledged to provide a breakdown of the reserves that back customer assets to make sure users are reassured.
The proof of reserves will be published within the next 30 days, according to Marszalek. Users want the audit to be released sooner, but auditing firms don't operate on speed, according to him.
He said that the objective of the audit was to verify that every coin on the platform was matched by the reserves.
An unaudited proof of reserves showed that 20% of the assets of the website were held in a token called shiba inu. Marszalek said this was just a reflection of what customers were buying.
Last year doge and shib were two extremely hot meme coins. We will hold it as long as our users hold it. We don't have a say in what you buy.
He said that the CRO token has never been used as a security for loans in the past. A source told CNBC that Bankman-Fried's Alameda borrowed from FTX and used the exchange's token to back those loans.
Marszalek admitted that $1 billion had been transferred to FTX over the course of a year, but that it was intended to avoid customers. He said that crypt.com only had exposure of $10 million.
Every time a customer places an order to buy or sell, we have multiple venues where we can hedge this order and pick the most cost efficient one with the lowest cost so we can pass on these savings.
We are always market neutral. FTX was one of the venues that had fund flows between them.
According to Marszalek, Crypto.com has 70 million users and made revenues of $1 billion each year for the next two years. In the year 2021, the company made headlines for a number of large marketing deals, including the re-christening of the Staples Center sports stadium and a commercial featuring celebrity actor Mattamon.
CNBC's Kate Rooney and her daughter.
All Rights Reserved © 2024
