Crypto.com users are confused whether they should be holding their funds on the exchange, and earn interest. Or should they withdraw all their funds to a non custodial crypto wallet? Let us find out.
We all are aware of the storm that has hit the crypto world recently. With the downfall of Sam Bankman-Fried and his two companies FTX and Alameda Research, ripple effects have been created in the industry. The latest one to have caught public scrutiny is Crypto.com.
In this article we are going to cover everything about Crypto.com and whether or not it is safe.
What is Crypto.com?
Before we look at what has been transpiring recently, let’s understand what Crypto.com really is. Crypto.com is a cryptocurrency exchange platform based in Singapore. It supports more than 250 different currencies where you can buy and sell NFTs, trade crypto, and also staking and earn, etc.
Crypto.com was a safe crypto exchange platform till last month, and now many are asking Crypto.com users to withdraw their funds from their platform.
How did sentiments turn against Crypto.com?
I would say back in June, when Celsius.com, a competitor of Crypto.com halted customer withdrawals, this was the time, I withdrew funds from other lending platforms.
Though there were no negative sentiments back then, but it was a safe thing to do. Like me, there might be many other users who withdrew their funds in June.
However, every other exchange, including Crypto.com continue to run their operations as usual.
Then, came the news of 3AC (Three Arrows Capital), a premium VC in crypto space getting liquidated on their positions. This caused another turmoil and many institutions lost money with 3AC.
Things were still in check as no one could establish their links with Crypto.com or any other exchange. And now, this month, FTX shut down, and filed for bankruptcy. They also halted customer’s withdrawals.
Fall of FTX caused a major shake out in the crypto space as not only individuals, but VCs, other crypto companies who held their funds or had lend money to FTX, could withdraw their funds.
This not only put FTX customer’s in danger, but also the other platforms which held customer funds on FTX.
Campaigns ran on Twitter asking all companies to show onchain Proof of Reserve.
And in midst of this, many companies knew they were insolvent. However, these companies had to show a proof that they hold reserve.
In some other unrelated news, while all this was on, someone leaked on Twitter, that Crypto.com sent 320 Thousand ETH to Gate.io on 21st October 2022. This was worth 400 million dollars and almost 82% of their total ETH.
Allegedly this information was first revealed by “jconorgrogan” on Twitter.
— Conor (@jconorgrogan) November 12, 2022
The CEO of Crypto.com, Kris responded to this by saying this was an attempt to “move to a new cold storage address” but was accidentally sent to a “whitelisted external exchange address”.
He also informed that the matter at hand had been sorted and the funds (280k ETH) were returned.
What were the consequences of this Twitter leak?
After the revelations, a myriad of speculations have started to come up.
Some believe that this might be a sign that Crypto.com is in some sort of a negative financial situation and is trying to liquidate its funds.
However, the most prominent and valid opinion right now is that this “move” has become a red flag pointing to the incompetence of Cryto.com.
Crypto.com also released their cold wallet addresses which showed that they hold more $SHIB than $ETH which is also a concerning factor.
What are the recent updates?
The Chainsaw also reported that more than 20 thousand withdrawals were processed from Gate.io in the last few hours and nearly 90 thousand unique transactions from Crypto.com.
Speculations are that Cypto.com might be using user funds for their own trading activities quite like FTX.
Many users have also complained of withdrawals being delayed or not being processed altogether.
As of the time of writing this article, the price of the native Cypto.com coin Cronos (CRO) has dropped to $0.06923.
What should be the takeaway from this?
While it is too early to say anything concrete about what may be happening with Crypto.com, if there is anything we have learnt from the FTX situation is to act quickly, and stay on a safer ground.
Your utmost priority right now must be protecting your funds and getting out of a position that may turn out to be financially harmful in the future.
Our takeaway: We are not saying Crypto.com is insolvent, however, we had seen in the past how CEOs of reputed exchanges posted openly on Twitter saying funds are safe and within next 48 hours, withdrawals were halted. Example: Celsius, and FTX.
Learn more about Crypto Crash November 2022; the collapse of FTX Empire: What caused it? and to find out best crypto derivatives exchanges that serve as alternate options for FTX, read Best FTX Alternatives: Which is the best exchange to Trade on?