Crypto.com Responds To Customers' Doubts Over Accidental $400M Ethereum Transfer

On Friday, Kris Marszalek, CEO of cryptocurrency exchange Crypto.com, announced that he would share “a full audited proof of reserve.”

The dashboard view of the Crypto.com reserve, provided by Nansen, showed that over 20% of the exchange’s reserve was held in Shiba Inu SHIB/USD tokens, a speculative Eth-based meme coin.

However, after reviewing the shared data, Twitter user @jconorgrogan asked about a mid-October transfer of 32,000 Ethereum ETH/USD worth approximately $400 million to another exchange, Gate.io. The ETH was transferred back to Crypto.com on Oct. 21.

Marszalek responded: “It was supposed to be a move to a new cold storage address but was sent to a whitelisted external exchange address. We worked with Gate team, and the funds were subsequently returned to our cold storage. New processes and features were implemented to prevent this from reoccurring.”

Understandably, the notion that $400 million in ETH was accidentally transferred to the wrong address, then sent back is not comforting to many retail investors.

Crypto.com says there is nothing amiss, but not all users are convinced, and some Twitter users are beginning to tweet about slowed withdrawals.

It's only FUD, they say. @kris reassures us that everything is operational.
And yet… you can't withdraw your Bitcoin holdings! What's going on?
P.S. withdrawal request made 2 hours ago, still pending @KimDotcom @MarioNawfal @RealChetBLong @cz_binance #CryptoCom #Bitcoin pic.twitter.com/TOW8OlvuDt

— VD (@VenetianDealer) November 13, 2022

In a statement from Crypto.com, a spokesperson said:

“The ETH transfers were made over three weeks ago, on October 21st to Crypto.com’s whitelisted corporate account at Gate.io. Crypto.com proceeded to withdraw the funds back to its cold wallets over the following days. The entirety of ETH was successfully withdrawn by Crypto.com and returned to our cold storage. The team at Gate.io assisted us by increasing our daily withdrawal limits with them."

"Fund movements from Crypto.com custody systems are only possible between approved and whitelisted addresses attached to our cold wallets, our hot wallets, and our corporate accounts at 3rd party exchanges," the statement read. "In this particular case, the whitelisted address belonged to one of our corporate accounts in a 3rd party exchange instead of our cold wallet. We have since strengthened our process and systems to better manage these internal transfers."

Now Read: Why FTX's Collapse Is The Crypto Equivalent Of The 2008 Lehman Brothers Crisis