Exchanging cryptocurrencies In late October, 320,000 ETH were unintentionally transmitted by Crypto.com to a wallet address connected to Gate.io. Although the platform has now recovered the funds, Changpeng Zhao, the CEO of Binance, recommended customers stay away from it.
Many in the cryptocurrency industry have expressed concern about the dependability of centralized players in the wake of the unprecedented collapse of FTX, which was once the third-largest cryptocurrency exchange and built a reputation as the industry’s go-to bailout man during the most recent crypto meltdown.
Executives in the crypto industry started to share proof of reserves to allay this mistrust. One example is that Crypto.com revealed the cryptocurrency addresses associated with the amount and types of cryptocurrencies it keeps on behalf of its users.
However, consumers were quick to establish a suspicious transfer of 320,000 ETH to a wallet address related to Gate.io on Oct. 21, 2022, largely because the exchange states that all user-owned cryptocurrencies are held offline in cold storage in conjunction with hardware wallet provider Ledger.
Kris Marszalek, the CEO of Crypto.com, admitted that the transaction was a mistake. It was transferred to a whitelisted external exchange address instead of the intended new cold storage location, he claimed, adding:
The money was eventually returned to their cold storage after they worked with the Gate staff. To stop this from happening again, new procedures and features were put in place.
Despite the justification, the site has left the crypto community with a negative impression. Many cryptocurrency users have questioned how $400 million worth of ETH could be unintentionally sent to an address that wasn’t the intended recipient.
Notably, Crypto.com has erred similarly before. The exchange gained notoriety in August after it came to light that it mistakenly handed investors in Melbourne AUD $10.5 million (worth over $7 million), rather than an AUD $100 ($67) refund. The incident happened in May 2021, but it wasn’t reported until December 2021, which makes it worse.
In the meantime, Binance CEO CZ, who has lately made headlines owing to his role in the FTX issue, recommended users to avoid Crypto.com because it is obvious they lack the necessary expertise.
When an exchange must transfer significant sums of cryptocurrency either before or after displaying their wallet addresses, there are obviously issues. Keep away. Keep SAFU, he said.
