Crypto.com: Proof of Reserve can say something about amount reserved
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Follow the flow of events
- Crypto.com may have been moved from the exchange to the cold wallet right before the asset declaration
- Research experts claim that the exchange may be dealing with customer funds and also be in debt
Recent upsetting events have rocked the crypto ecosystem, which subsequently led exchanges to post proofs of their reserves, such as Crypto.com. On November 11, Kris Marszalek, CEO of Crypto.com, tweeted that the company's stock check is ongoing.
However, the exchange later released details about the asset, which Marszalek claims is in the cold wallet. Following this revelation, new reports have surfaced that Crypto.com may have “rushed” to move its funds away from exchanges after Binance CEO CZ suggested this approach.
Onchain proof
Synthetix Protocol Contributor (SNX) and crypto researcher Adam Cochran informed the community of an Etherscan transaction that could have put Crypto.com in bad shape. According to Cochran, the configuration of the exchange wallet shows signs of being unreliable.
Crypto.com appears to have listed multiple assets on various exchanges. According to an Etherscan transaction, Crypto.com sent 1,500 ethereum [ETH] from its cold wallet three hours ago. The same cold wallet also transferred assets to Deribit, Gate.io, Binance, and Huobi during the same period.
Doubts are based on the exchange's claim that user assets are safe in cold wallets. Meanwhile, the entries were sent through a deposit contract address created less than three months ago.
Interestingly, Cochran is not alone in alerting the crypto community to this transaction. Another researcher from GMB Ventures, blockchain news portal Churchupcontrol, is able to use client funds for arbitrage.
According to him, the exchange exploits the price difference between Binance and Gate.io to make “risk-free” money. He also added that Crypto.com recently took action ten hours ago.
This means that exchanges quickly revise their public asset declarations to save space. As a result, client funds are also at risk of being misused.
Loans, accidents and others
Additionally, Churchupcontrol stated that the FTX incident caused Crypto.com to make a hasty decision. According to Nansen, you will recall that their reserves proved to be debt-free. However, according to FTX monitoring, the panic led to changes in its margin table details.
This also includes interest on loans. As a result, the investigator noted that the exchange may be holding less assets than he claimed. Recently, Crypto.com announced a surprise move towards Gate.io.
At the time of publication, CZ appears to have received the above information. The Binance CEO responded by saying that it was a clear sign of trouble if the exchange had to move funds before announcing the assets. Meanwhile, neither the official account nor the CEO of the exchange have responded to this development.
Nov 13, 2022
