Crypto.com transferred nearly 85% of ETH reserves to Gate.io in October, CEO assures it was accidental
The Twitter community has gone wild, debating the hidden motives behind the October asset transfer between Crypto.com and Gate.io.
The exchange’s CEO, Chris Marzalek, responded to the speculation, saying the transfer was accidental and then reversed.
It was supposed to be a move to a new cold storage address, but it was sent to a whitelisted external exchange address. We worked with the Gate team and the funds were then returned to cold storage. New processes and features have been implemented to prevent this from happening again.
— Chris | Crypto.com (@kris) November 13, 2022
According to Marszalek, the funds had been sent to a new cold storage address, but were mistakenly sent to a whitelisted Gate.io address.
Gate.io backed up this theory, reiterating in a Twitter post that the proof of reservation audit did not include ETH transferred from Crypto.com. The company also Transaction ID We have confirmed that all funds have been returned to Crypto.com.
explanation @CryptocomForwarding for transparency and education:
1) PoR audit snapshot taken on October 19th. https://t.co/a4NJTN8Brjdid not include a security deposit for https://t.co/5U5tZWFfBF
2) All 320,000 ETH returned https://t.co/7G5l3YLLIhhttps://t.co/IvyiBu9aBY—Gate.io (@gate_io) November 13, 2022
send on
blockchain transaction data Etherscan data shows that Crypto.com transferred 320,000 Ethereum (ETH) to the wallet and then transferred the assets to the Gate.io wallet on October 21st. At the time, the property was valued at $415.9 million.
Exchanges often move funds for liquidity purposes. However, the timing of the deal sparked speculation among the community.
On October 28th, Gate.io will proof of reserves and made it open source.of report It shows that Gate.io has enough ETH reserves to overcollateralize user funds by 104%. However, the report states that the data for proof of reserve audit was obtained on Oct. 19, i.e. before the transfer of his 320,000 ETH by Crypto.com.
On November 11, Marzarek announced on Twitter that the exchange has a $3 billion reserve, and shared cold storage wallets for BTC and ETH. The move was intended to quell bankruptcy fears — Marszalek added that more detailed evidence of the reserves report will be shared in the coming days.
Kris’ ETH cold wallet list included an address that transferred 320,000 ETH to Gate.io. This list also included addresses to which Gate.io sent about 285,000 ETH tokens between his October 25th and his October 30th.
In light of rumors that Gate.io’s reserves are being inflated by Crypto.com’s reserves, Marszalek also posted a Twitter thread.
The ETH transfer that caused so much FUD and speculation on Twitter today happened over three weeks ago on October 21st. https://t.co/pFc4Pz9nFRcorporate accounts whitelisted in https://t.co/Mr9GCkL2gV.
— Chris | Crypto.com (@kris) November 13, 2022
Marszalek explained that funds from Crypto.com’s custody system can only be moved to whitelisted hot wallets, cold wallets and approved third-party exchange accounts. The funds were moved to his Crypto.com corporate account using Gate.io instead of the intended cold wallet.
Twitter users claim sinister motives behind Crypto.com transfers
Despite endorsements by Crypto.com and Gate.io, many Twitter users claim that the two exchanges have borrowed money from each other to prove their reserves.
Oh my God Some crypto exchanges appear to be borrowing money from each other to disguise a “snapshot” of their reserves. https://t.co/D56BrNNGPX
— Coffeezilla (@coffeebreak_YT) November 13, 2022
Blockchain reporter @WuBlockchain pointed out that Huobi Global sent 10,000 ETH to Binance and OKX wallets after releasing a proof of funds snapshot. According to the user, the address showed 14,858 ETH as reserved during the snapshot, but held 4,044 ETH after the transfer.
According to CryptoSlate’s analysis, the above wallet contained 18,225 ETH at the time of writing. ether scan data.
Some Twitter users linked Huobi’s situation to Crypto.com and Gate.io’s, claiming the exchange was inflating reserves and returning assets after the snapshot was submitted. Users viewed this transfer as unconfirmed evidence to support the Crypto.com bankruptcy theory.
Binance CEO Changpeng ‘CZ’ Zhao further fueled these doubts and fears by warning users against exchanges conducting large asset transfers either before or after the publication of proof of funds.
If an exchange needs to move a large amount of cryptocurrency before or after presenting a wallet address, it’s a clear sign of a problem. please stay awaystop #SAFU🙏
— CZ🔶 Binance (@cz_binance) November 13, 2022
Marszalek repeatedly assured users that Crypto.com sent funds to Gate.io in a clear mistake. And history supports his version of the story: Crypto.com sued a customer earlier this year after accidentally transferring $10.5 million to a user.
However, the day before the bankruptcy filing, confidence in the crypto ecosystem was shaken, with FTX boss Sam Bankman-Fried assuring users that FTX US was “fully liquid,” and all claims were It is caught with a grain of salt.
