The fall of FTX has left the community distrustful and on high alert. On October 19, Crypto.com experienced an operation error transfer, resulting in the erroneous transfer of 320,000 ETH to the Gate.io account it was using. This has caused FUD about the exchanges’ proof of reserves.
Kris Marszalek, the CEO of Crypto.com, confirmed the “mistaken” transfer, while Gate.io clarified it. Crypto.com successfully withdrew the entire amount of ETH, with the help of Gate.io, in returning all incorrectly transferred assets.
“Fund movements from Crypto.com custody systems are only possible between approved and whitelisted addresses attached to our cold wallets, hot wallets, and corporate accounts at 3rd party exchanges,” Marszalek explained.
The whitelisted address during the transfer belonged to one of our corporate accounts in a third-party exchange rather than their cold wallet.
Later, Gate.io, with the help of the US auditing firm Armanino, Gate.io released the exchange’s asset reserve certificate and asset audit snapshot.
Crypto.com also took the proactive step of providing a preliminary set of disclosures, sharing wallet addresses with blockchain analysis firm Nansen to create a dashboard of nearly $3 billion in reserves and other assets.
However, the seeds of FUD were sown when community member @jconorgrogan questioned, “why would Crypto.com send 320k ETH (82% of their ETH today) to Gate.io on October 21?” While Gate.io returned 285k ETH in a week. Further investigation revealed that the missing 35,000 ETH was sent to a different address, which the crypto exchange has yet to confirm.
Mario Nawfal, CEO of the International Blockchain Consulting firm, tweeted a response by @PiGamification, an ex-Crypto.com employee who raised ethical concerns about how the company was run and was fired.
Also Read: Binance Shares Details of Wallet Addresses for Transparency
Binance CEO Changpeng Zhao chimed in, saying that an exchange that moves large amounts of crypto before or after its proof-of-reserve is a “clear sign of problems.”
