Cryptocurrency exchange Crypto.com accidentally sent 320,000 ETH to a wallet address connected to Gate.io in late October. Although the platform has since recovered the assets, Binance CEO Changpeng Zhao advised users to stay away from the platform.
The unprecedented collapse of FTX, once the third-largest cryptocurrency exchange that earned a reputation for saving crypto during the recent crypto crisis, has led many players in the crypto industry to express their concerns about the reliability of centralized actors.
To assuage this skepticism, crypto executives have started sharing proof of reserves. Crypto.com has released its crypto addresses and disclosed how much and what cryptocurrencies it stores on behalf of its customers.
However, users quickly spotted a suspicious transfer of 320,000 ETH to a wallet address linked to Gate.io on October 21, 2022, largely because the exchange claims that all cryptocurrencies held by users are stored offline in cold storage in cooperation with hardware wallet provider Ledger.
Crypto.com CEO Kris Marszalek said the transaction was a mistake. “It was supposed to be a move to a new cold storage address, but it was sent to a whitelisted external exchange address,” he said, adding:
“We worked with the Gate team and the funds were then returned to our cold storage. New processes and features were implemented to prevent something like this from happening again.”
Despite the explanation, a bland aftertaste persists in the crypto community. Many crypto users have wondered how it was possible to accidentally send $400 million worth of ETH to an address that was not the intended recipient.
This is not the first time Crypto.com has made such a mistake. In August, the exchange made headlines after it was revealed that it had accidentally sent A$10.5 million (worth over $7 million) to investors in Melbourne instead. only to reimburse them 100 Australian dollars ($67). To make matters worse, the incident took place in May 2021 and went unnoticed until December 2021.
Meanwhile, Binance CEO CZ, who recently made headlines for his involvement in the FTX saga, advised users to stay away from Crypto.com as it’s a clear sign they don’t. are not competent enough.
“If an exchange needs to move large amounts of crypto before or after showing their wallet addresses, that’s a clear sign of trouble. Stay away. Stay SAFU,” he said.