Key Takeaways
- As per on-chain data, on October 28, Gate.io returned 285,000 ETH back to Crypto.com.
- Crypto.com’s CEO Kris states the funds were sent accidentally to Gate.io.
Leading crypto exchange Crypto.com’s cold store information revealed a suspicious transfer of 320,000 ETH to a wallet address linked to Gate.io on October 21, 2022. The shocking revelation comes days after Crypto.com published its “audited proof of reserves” amid the downfall of Sam Bankman-Fried’s FTX.
The news was first brought to light by Twitter user @jconorgrogan, who raised concerns about the transfer of 320,000 ETH from Crypto.com’s cold wallet to Gate.io. This was concerning since Crypto.com has repeatedly stated that 100% of user-owned crypto is held offline in cold storage in collaboration with hardware wallet provider Ledger.
Soon after the tweet started gaining traction, Crypto.com’s CEO Kris replied to the tweet with his reasoning. He said the funds were sent accidentally to Gate.io:” It was supposed to be a move to a new cold storage address, but was sent to a whitelisted external exchange address. We worked with the Gate team, and the funds were subsequently returned to our cold storage. New process and features were implemented to prevent this from reoccurring”, his tweet reads.
As per on-chain data, on October 28, Gate.io returned 285,000 ETH back to Crypto.com. The remaining 35,000 ETH was sent to a different address, contrary to Marszalek’s statement that all funds were returned. Many in the crypto community believe the transfer could trigger a liquidity scare for Crypto.com.
This is not the first time Crypto.com has come under public scrutiny owing to its accidental transfers. Earlier this year, the exchange mistakenly transferred $10.5 million to an Australian woman in May 2021 instead of a refund of just $100. Concerningly, the mistake was only noticed seven months later after carrying out an audit.
Like Crypto.com, several other crypto firms like Binance have now decided to publish their Proof of Reserves against the backdrop of the FTX liquidity crisis to quench people’s apprehensions and instill investor confidence.
