The FTX crash highlighted the importance of proof of reserves to avert risks and improve investor confidence, prompting major cryptocurrency exchanges to publicly list their cold and hot wallet addresses. While trying to confirm the availability of funds on Crypto.com, cold store information revealed a suspicious transfer of 320,000 ether (ETH) to a wallet address linked to Gate.io on October 21, 2022.
Community member jconorgrogan has raised concerns about the transfer of 320,000 ETH from Crypto.com’s cold wallet to Gate.io, given previous allegations that 100% of user-owned cryptocurrency is being held offline in cold storage in partnership with a wallet provider. Ledger devices.
As the speculation gained traction, Crypto.com CEO Chris Marsalek revealed that the funds — representing 82% of Crypto.com’s ETH in cold wallets at the time — were mistakenly sent to Gate.io:
“It was supposed to be a move to a new cold store address, but it was sent to an off-whitelist exchange address.”
Speaking to Cointelegraph, a Crypto.com spokesperson clarified that the address whitelisted on Gate.io is owned by Crypto.com. Regardless, Marszalek confirmed that Gate.io has returned funds to Crypto.com’s cold storage and reassured investors that new processes and features are in place to prevent a recurrence.
And why is https://t.co/bVgf3bBSGR sending back to https://t.co/2vZHyCacXG 285K ETH after 5-7 days? pic.twitter.com/GhH6QGXntd
– Conor (@jconorgrogan) November 12, 2022
While on-chain data confirms that Gate.io returned 285,000 ETH to Crypto.com, Marszalek claimed that all funds have been returned. Further investigations showed that the missing 35,000 ETH was sent to a different address, which has yet to be confirmed by the cryptocurrency exchange.
In a series of tweets, Marsalek later clarified what happened when he confirmed that all operations of Crypto.com were operating normally.
The ETH transfers that generated so much FUD and speculation on Twitter today were made more than three weeks ago, on Oct. 21 to https://t.co/pFc4Pz9nFR the company’s whitelisted account at https://t.co/Mr9GCkL2gV.
– Chris | Crypto.com (kris) November 13, 2022
This is not the first time Crypto.com has made headlines about an unintended transfer. In August 2022, Crypto.com was found to have mistakenly sent A$10.5 million (worth over $7 million) to Melbourne investors, which was supposed to be a refund of A$100 ($67). The incident occurred in May 2021 but was not discovered until an annual audit in December 2021.
This is not the first time Crypto.com has made headlines for an unintentional transfer. In August 2022, Crypto.com was found to have mistakenly sent A$10.5 million (worth over $7 million) to Melbourne investors, which was supposed to be a refund of A$100 ($67). The incident occurred in May 2021 but was not discovered until the annual audit in December 2021.
Marszalek promised to publish an audited Crypto.com booking guide on November 10, highlighting the importance of transparency and user security.
We share the belief that it is essential for crypto platforms to share Proof of Reserves publicly and https://t.co/pFc4Pz9nFR will publish our audited Proof of Reserves.
– Chris | Crypto.com (kris) November 10, 2022
With most cryptocurrency companies willing to share Proof of Reserves, investors now have the opportunity to confirm the existence of their funds, ultimately preventing entrepreneurs from misusing cold storage funds.