As it is known, Bitcoin (BTC) and altcoin exchange Crypto.com accidentally sent more than 320,000 Ethereum worth approximately $400 million to rival cryptocurrency exchange Gate.io on October 21. Users who thought this to be suspicious made an effort to withdraw their funds from the platform. Here are the details…
Big withdrawals are taking place on Bitcoin exchange Crypto.com
This information was made public after a Twitter user shared a screenshot a few weeks ago asking why a significant amount of ETH mysteriously left Crypto.com. Crypto.com CEO Kris Marszalek responded to the tweet, claiming that an employee’s mistake led to the transfer. cryptocoin.comAs we reported, according to Marszalek, someone on his team unintentionally sent 80 percent of their ETH reserves to a “whitelisted exchange”.
The CEO of Crypto(.)com says they accidentally sent $400 million $ETH to the wrong wallet address.
Wildly irresponsible.
Get off these platforms. pic.twitter.com/SABIZPEYWZ
— Dylan LeClair 🟠 (@DylanLeClair_) November 13, 2022
He said the money had to be transferred to a new cold wallet. “The funds were supposed to be moved to a new cold storage address but were sent to a whitelisted external exchange address,” Marszalek said. “We worked with the Gate team and the funds were then returned to our cold storage.” Marszalek added that all ETH was sent back.
The error comes at a time when users are closely analyzing how exchanges are managing their cash, and trust in centralized exchanges has waned following the collapse of FTX. Also, this isn’t the first time Crypto.com has made a money transfer mistake. Last year, more than $7.1 million was inadvertently transferred to a customer by an employee. Later, the company sued the buyer to get the money back.
The announcement of the exchange worried users
Crypto.com’s rationale is questioned by many in the cryptocurrency industry, who think the transfers may have something to do with proof of reserve. Meanwhile, Adam Cochran of Synthetix and Yearn Finance stressed that the CEO needs to fill some gaps in Crypto.com’s proof of existence. Cochran added that the “wait for our inspection” response was insufficient. Cochran used the following statements:
If there are assets, it should be pretty simple to show 80 percent of those assets in the meantime to secure users. You understand that in this environment, people have reason to worry and ask questions.
Prominent crypto phenom Ben Armstrong (BitBoy) announced that he was withdrawing all his holdings from Crypto.com and encouraged others to do the same. He claimed that recent events taught him the importance of keeping his coins in his own wallet. Binance CEO Changpeng Zhao also commented on the event, stating that it is a “clear sign of problems” for an exchange to move a significant amount of cryptocurrency before or after proof of reserve. Crypto.com CEO, on the other hand, condemned the rumors about the stock market. He suggested that users pay more attention to companies that have ties to FTX.
Transfers in the stock market intensified
Meanwhile, the exchange is currently facing mass withdrawals. This Sunday, 90,000 Ethereum transactions were processed on the exchange’s hot wallet. Normally, this amount would be around 6,000 transactions.
