Digital Assets: Who's the Next in this Domino Effect?

The topic started on Twitter, where Crypto.com was getting ripped. This speculation sent Crypto.com's CRO to drop by approximately 50% in the past few days.

A screenshot of Etherscan posted by a Twitter user shows a large amount of cryptocurrency flowing from the Crypto.com cryptocurrency exchange to another exchange, Gate.io. “Does anyone know why Crypto.com sent 320,000 ETH (82% of their ETH today) to Gate.io on October 21？ And why would Gate.io send 285K ETH back to Crypto.com 5-7 days later？”

Kris Marszalek, CEO of Crypto.com, replied.“ Originally this was supposed to be transferred to a new cold wallet address but was sent to an external exchange address that was in a whitelist. We worked with the Gate team, and the funds were then returned to our cold wallet.” He later clarified that all funds had been returned.

Many investors took to Twitter to express their anger over the matter, especially over FTX's bankruptcy announcement. They reacted with horror to the news that the platform had accidentally sent such a large percentage of their money elsewhere through carelessness and that such a huge mistake had occurred without any safeguards.

The spectacular public collapse of FTX last week has already put the cryptocurrency market on edge. When FTX filed for bankruptcy, it had previously been one of the biggest exchanges in the world. According to a Reuters report, FTX had at least $1 billion in client funds missing.

According to participants in the cryptocurrency industry, Changpeng Zhao, the CEO of Crypto.com's largest rival, Binance, appeared to question the nature of the transfers without identifying the company, which may have sparked Sunday's withdrawals, as reported by the Wall Street Journal.

Zhao tweeted on Sunday, It is a clear sign of problems if an exchange [has] to move large amounts of cryptocurrency before or after they demonstrate their wallet addresses.

Later on Sunday, Marszalek tweeted that the October transfers had “generated so much [fear, uncertainty, and doubt] & speculation on Twitter” weeks later, dismissing the worries about Crypto.com.

A representative for Crypto.com stated that the platform was experiencing increased activity and pointed out that its assets completely matched customer deposits.

The levels of service are unaffected by fluctuations in deposit and withdrawal activity, he continued.