Cryptocurrency exchange Crypto.com continues to be exposed to suspicious activity as it clearly has a close association with FTX.

After FTX, the cryptocurrency trading platform went bankrupt just five days after being identified as having liquidity problems, the awareness of the local crypto community turned to another platform, Crypto.com.

As reported by Coinlive, on the morning of November 13, many cryptocurrency end users spread the word on Twitter that Crypto.com had sent up to $400 million in ETH to the Gate.io account in late October, just before Gate.io released evidence of ownership of client assets, fueling rumors that these exchanges had been colluding with each other to make false claims.

Crypto.com CEO’s Explanation

The CEO of Crypto.com confirmed that the transaction was “accidentally transferred by mistake”, but this is a difficult explanation to verify, even in an irresponsible manner, given not only the nature and size of the transaction but also the place of Crypto.com and Gate.io. Subsequently, the two exchanges released official announcements stating that there was no suspicious association behind it, with the second Gate.io capturing stability before Crypto.com mistakenly transferred the proceeds.

In response to the most recent accusation, CEO Kris Marszalek mentioned, via Twitter, the following:

“This is false. We have minimal exposure to FTX (under US10m) and only used it as a trading venue to hedge customers’ trades. We never deployed capital for yield with FTX or any 3rd party.”

“To simplify for people who don’t understand how hedging works in this scenario: we deposit USDC, use it to buy other coins on the exchange, and withdraw back to our wallets.”

Difficulties Surround Crypto.com

Like FTX, Crypto.com is an up-and-coming trading platform in 2019-2022, resonating with hundreds of thousands of dollars in sponsorship deals, such as investing $700 million to buy back the naming rights of a city in Los Angeles (USA), dedicating a large amount of income to do a global promotion campaign with the talent of Matt Damon, or allocating $215 million to buy other cryptocurrency companies. The exchange also recently announced that it will create a new headquarters in France, with an investment of $145 million, despite having to cut 260 employees in the middle of the year.

Additionally, of the $2.8 billion in consumer reserves announced by Crypto.com, 19.68% are Shiba Inu (SHIB) tokens. The value of SHIB held by the exchange is even higher than ETH.

The value of the Crypto.com CRO coin has dropped over 60% in the last seven days due to continued negative data as well as the cryptocurrency industry crash due to the FTX crash.

By Audy Castaneda

LEAVE A REPLY

Please enter your comment!
Please enter your name here