Crypto.com mistakenly transferred $400 million to the incorrect person, but this time they got it back.
Recently, Crypto.com admits to committing yet another very significant and worrying clerical error: around three weeks ago, it transferred 320,000 in Ethereum (or roughly $416 million USD) to another cryptocurrency exchange named Gate.io by mistake (via Web3 Is Going Just Great).
CEO of Crypto.com Kris Marszalek claims in a tweet that the firm unintentionally transferred cryptocurrency to a “whitelisted” address associated with its business account at Gate.io when it was intended to send it to one of its cold wallets, or offline wallets.
In order to promote openness about how the exchange uses its cash, Marszalek publicly revealed the company’s cold wallet addresses. Conor Grogan, a user who dug into Crypto.com’s transactions, notes that the exchange moved 320,000 in Ethereum to Gate.io on October 21st, which accounts for nearly 80% of the company’s Ethereum assets.
Marszalek later added that it was able to recover “the entirety” of the transferred assets. Users on Twitter confirmed that Crypto.com received its funds back about a week later, transferring 285,000 Ethereum (~350 million USD) into one wallet and putting the remaining 35,000 Ethereum (~43 million USD) into another.
Gate.io also issued a response, noting that it started returning the funds once it realized the transfer was “an operation error.” But hey, at least Crypto.com’s funds were actually returned this time. In August, a pretty unfortunate typo resulted in Crypto.com giving a customer $7.2 million instead of a $68 refund, which it’s currently suing to get back.
Despite the reassurances from Marszalek that “all our systems are operating normally,” this whole ordeal is sparking withdrawals from the platform as users begin to worry whether Crypto.com will suffer the same fate as the now-bankrupt FTX and other beleaguered firms.
Some users speculate whether the transfer was made in order to alter the proof of reserves that numerous crypto exchanges promised to provide in response to FTX’s collapse.
While Gate.io published its asset audit snapshot on October 19th and, clarified that “Crypto.com’s deposit was not included,” Crypto.com provided partial proof of reserves on November 11th.
Binance CEO Changpeng “CZ” Zhao appeared to allude to the situation in a tweet on Sunday morning, stating: “If an exchange have to move large amounts of crypto before or after they demonstrate their wallet addresses, it is a clear sign of problems. Stay away.”
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