Crypto.com declines to say how much tokens it holds on its balance sheet even as CEO Marszalek tries to reassure customers their deposits are safe
“FTX is fine. Assets are fine,” Sam Bankman Fried said in a tweet on November 7 just four days before crypto exchange FTX filed for Chapter 11 bankruptcy. Virtually no one saw it coming except for a few people in Bankman Fried’s inner circle.
The sudden collapse of FTX has caused many jittery crypto investors to withdraw their crypto deposits from exchanges. Considering that Crypto.com, a rival crypto exchange, uses celebrity endorsements to market its digital assets, chatters have been swirling around social media that Crypto.com might be the next shoe to drop.
In the wake of the FTX scandal and fallout, Crypto.com CEO Kris Marszalek took to Twitter on Friday to reassure customers after the accidental transfer of $400 million in Ethereum tokens to the Asian crypto exchange Gate.io. Just like Bankman Fried said a week earlier about the financial situation of FTX, Marszalek said that Crypto.com is financially sound and not facing the same liquidity crisis that led to the fall of the now-bankrupt FTX exchange.
In a tweet Saturday, Adam Cochran, an investor in blockchain projects and founder of Cinneamhain Ventures, said:
“I would just get your money out of Crypto.com now. If they are full reserves they shouldn’t care if you sit on the sidelines for a week, but their handling of this hasn’t met the bar.”
It appears many of Crypto.com’s customers took Cochran’s advice. Confidence in Crypto.com has dropped as customers withdrew their funds from the exchange. Crypto.com’s native cronos token (CRO) is nearly declining to the crisis levels that affected FTX native token called FTT. Its cronos token has also dropped nearly 40% in the last week.
On Friday, Marszalek announced that he would share “a full audited proof of reserve.” The company’s reserve showed that over 20% of the company’s reserve was held in Shiba Inu SHIB/USD tokens, a speculative meme coin.
Over the weekend, Marszalek also had ‘AMA’ (ask-me-anything) and took questions in a livestreaming YouTube address. He told the audience that Crypto.com always maintained reserves to match every coin customers held on its platform, adding that Crypto.com had a “tremendously strong balance sheet” and that it was “business as usual” with deposits, withdrawals, and trading activity.
In a tweet on Monday evening, Marszalek also followed up by indicating that “the withdrawal queue is down 98% within the last 24 hours.”
“The withdrawal queue is down 98% within the last 24 hours. It remains business as usual at http://Crypto.com. Kudos to our team who built resilient blockchain infrastructure — operating normally under load. Onwards!”
The withdrawal queue is down 98% within the last 24 hours.
It remains business as usual at https://t.co/pFc4Pz9nFR.
Kudos to our team who built resilient blockchain infrastructure — operating normally under load.
— Kris | Crypto.com (@kris) November 14, 2022
Today, Marszalek also appeared on CNBC to further reassure investors and customers. When asked by CNBC if Crypto.com holds tokens on its balance sheet, Marszalek said it’s a “very conservatively run business” that holds “mostly fiat and stablecoins as our source of capital.”
However, CNBC’s Becky Quick later reminded Marszalek that FTX had “billions of dollars” in its self-created FTT token before it declared bankruptcy. Becky further asked: “Yeah, but how much?”
“Marszalek declined to answer,” CNBC reported.
“We’re a privately held company,” he said, adding that he’s not going to provide specifics “about our balance sheet.”
Declining to answer this question raises another question about the trust and long-term viability of the company. It may further cause customers who are still on the fence about their deposits at Crypto.com to move their assets away from the company.
Marszalek went on to say that he feels good about where the company is but he’s worried about the impact of FTX’s collapse on the whole crypto industry.
“We feel quite good about where we are as a company and our operations,” said Marszalek, pointing out that the company generated over $1 billion in revenue last year and has topped that number this year. “What worries me is the impact of this collapse on the whole industry. It sets us back a good couple of years in terms of the industry’s reputation.”
Founded in 2016, Singapore-based Crypto.com is a pioneer of payments and cryptocurrency with a mission to accelerate the world’s transition to cryptocurrency. The startup is working towards this goal with its portfolio of consumer products, including the Crypto.com Wallet & Card App, the MCO Visa Card, Crypto Invest, Crypto.com Chain, as well as Crypto Credit.
To date, Crypto.com now serves over 5 million customers today, providing them with a powerful alternative to traditional financial services through the Crypto.com App, the Crypto.com Card, and the Crypto.com Exchange. The Crypto.com Wallet allows users to buy, sell, and pay with cryptocurrencies, such as Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Ripple (XRP), Binance Coin (BNB), and Crypto.com’s MCO and CRO Tokens.