With the sudden and traumatic collapse of FTX, people are on edge right now regarding centralized exchanges.
The exchange raising blood pressures the most right now? Crypto•com.
It’s been an interesting week for Matt Damon’s favorite exchange, to say the least.
For the second time in a year, crypto•com made a costly transferring error. While their previous mishap was only for $6 million, this most recent debacle was for $405 million.
Yep, somehow crypto•com accidentally sent 320,000 ETH to fellow exchange Gate.io instead of a cold wallet as intended. They’ve since recovered about 285,000 ETH.
This begs a few questions:
- Why was crypto•com moving that much ETH in the first place?
- How in the world did they make such a big mistake in moving it?
- Why did Gate.io only return 285,000 ETH, instead of the full 320,000?
Unfortunately, we don’t have answers to these questions. Crypto•com CEO Kris says that everything is fine, but as expected, most people disagree.
21% in SHIB?
The FTX debacle did bring one good thing: a push for centralized exchanges to publish proof of their reserves. After all, if FTX had been more transparent about its balance sheet, the massive fraud, and stealing of customer funds that led to its downfall would have been impossible.
As part of this effort, crypto•com teamed up with blockchain analytics firm Nansen to create a dashboard of their reserves. The results were…unexpected.
21% of crypto•com’s reserves are in SHIB??? A completely useless meme coin??
Thankfully, there appears to be a logical explanation. As crypto•com explains, because the reserves are held 1:1 with customer funds, they are determined by what customers buy and hold. So, crypto•com has to hold 21% in SHIB because 21% of user funds are in SHIB.
Makes sense, but what doesn’t make sense is why so many people are still buying SHIB.
Should You Be Concerned?
People are spooked right now by any sketchy exchange behavior and for good reason. FTX was seemingly doing great… until it wasn’t, and a lot of people lost a lot of money as a result.
The last thing anybody wants is to lose money, and it appears that after the ETH cold wallet fiasco, people are scrambling to get out of crypto•com to be safe. It hasn’t reached bank run levels yet, and CEO Kris says everything is normal, but still, something to keep an eye on.
In our opinion, you are better off safe than sorry. It remains to be seen how bad the FTX contagion is, the CRO exchange token is down 40% over the last week, and CEO assurances aren’t worth the paper they’re printed on. After what happened with FTX and FTT, do you really want to hold money on another exchange with mass withdrawals and a crashing native token?
Play it safe and get out now. You can always put money back on crypto•com later, but you won’t be able to get money out if it goes belly up.
Don’t risk learning “not your keys, not your coins” the hard way.