The boss of cryptocurrency exchange Crypto.com took to YouTube Monday to reassure users of his platform after the stunning collapse of rival firm FTX sparked fears of a market contagion.
In an “AMA” (ask me anything) on YouTube, the platform’s CEO Kris Marszalek said that his company had a “tremendously strong balance sheet” and that it wasn’t engaged in the kinds of practices that led to the downfall of Sam Bankman-Fried’s FTX last week.
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“Our platform is performing business as usual,” Marszalek said in the AMA. “People are depositing, people are withdrawing, people are trading, there’s pretty much normal activity just at a heightened level.”
FTX filed for Chapter 11 bankruptcy protection on Friday after concerns over the company’s financial health resulted in a run on the exchange and a plunge in the value of its native FTT token. FTX tried to reach a deal to be acquired by Binance, the largest venue for trading digital assets, but this fell apart after Binance backed out citing reports of mishandled customer funds and alleged U.S. government investigations into FTX.
Alameda Research, FTX’s sister company, borrowed billions in customer funds from the exchange to ensure it had enough funds on hand to process withdrawals, CNBC reported Sunday. Bankman-Fried declined to comment on allegations of misappropriating customer funds but said its recent bankruptcy filing was the result of issues with a leveraged trading position.
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“We never engage as a company in any irresponsible lending practices, we never took any third-party risks,” Marszalek said Monday. “We do not run a hedge fund, we do not trade customers’ assets. We always had 1-to-1 reserves,” he added.
His comments come after the revelation Sunday that Crypto.com mistakenly sent $400 million worth of the ether cryptocurrency to Gate.io, another crypto exchange, in October, a mishap that raised fears Crypto.com users’ funds may be at risk. Crypto.com and Gate.io said they were sent by mistake and were quickly returned to Crypto.com after the error was identified. Marszalek tweeted Sunday that the firm had meant to send the funds to its “cold wallet” — meaning an offline cryptocurrency wallet — but were instead moved to a whitelisted corporate account with Gate.io. In its own statement, Gate.io said the transactions were the result of an “operation error transfer” and that all assets have since been returned to Crypto.com.
Source : CNBC.COM