Crypto.com Accidentally Sent $400 Million to a Competitor

Cryptocurrency exchange Crypto.com — which bought the naming rights, alongside its peers at the newly-imploded FTX — is feeling the pressure following FTX's collapse.

This week, all eyes are on Crypto.com CEO Kris Marszalek, who had to fess up over the weekend to the fact that his company accidentally sent $400 million worth of Ethereum to an address registered to rival exchange Gate.io.

"It was supposed to be a move to a new cold storage address, but was sent to a whitelisted external exchange address," Marszalek tweeted over the weekend. "We worked with [the] Gate team and the funds were subsequently returned to our cold storage. "

It's an embarrassing confession that's already sent shockwaves through the already shaken up crypto exchange industry. Cronos, Crypto.com's own token, is down around 40 percent over the last week. Meanwhile, the exchange's daily volume is down from $4 billion highs to a mere $284 million last month, Coindesk reports.

Crypto.com's leadership is now doing damage control and is trying to calm investors.

Speculation surrounding the company's operations got so bad that Marszalek had to step in himself, arguing that criticism of the fateful transfers amounted to nothing more than "FUD" or "fear, uncertainty and doubt," a term used among crypto enthusiasts to denote the intentional seeding of negativity for financial gain.

The instance clearly shows that last week's collapse of crypto exchange FTX, formerly run by disgraced CEO Sam Bankman-Fried, has left a lasting impression amongst investors.

FTX went down like a house of cards after it turned out Bankman-Fried made some grave accounting errors and wasn't in a position to refund customers due to a "liquidity crunch."

Experts, however, believe the latest controversy surrounding Crypto.com and its CEO won't be a repeat of that.

"To its credit, Crypto.com continues to have the funds to meet these withdrawals, lending further credence to its CEO’s claims that their assets are backed 1:1," Owen Rapaport, co-founder and CEO of Argus, told CNBC.

Marszalek has also announced that his company will publish an audited "proof of reserves" within the next month, according to the report.

Crypto.com also actively distanced itself from the FTX dumpster fire, with Marszalek arguing during a YouTube interview that his exchange's exposure to FTX was limited to $10 million after making a $1 billion deal earlier.

"We recovered $990 million from FTX," he said.

A whopping 20 percent of Crypto.com's reserves are also made up of Shiba Inu coins, which, according to Marszalek, is simply what his customers like to trade.

It's been a tumultuous time for cryptocurrency exchanges over the last week, to say the very least. The kind of uncertainty triggered by FTX's implosion has clearly left a mark on investors, who are increasingly starting to question the legitimacy of some of the largest exchanges out there.

More on FTX: Disgraced Sam Bankman-Fried Steps Down as CEO of FTX

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