CryptoCom CEO Says Balance Sheet Strong, Exchange Not in Trouble

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CryptoCom CEO Says Balance Sheet Strong, Exchange Not in Trouble
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Singapore-based crypto exchange CryptoCom’s chief executive said the firm will prove all naysayers wrong on the platform being in trouble, and that it has a robust balance sheet and took no risks.

Chief executive Kris Marszalek took questions in a livestreaming YouTube address, and also said the platform always maintained reserves to match every coin customers held on its platform.

“We will just continue with our business as usual and we will prove all the naysayers and there is (sic) many of these right now on Twitter over the last couple of days,” Marszalek said.

“We will prove them all wrong with our actions. We will continue operating as we have always operated. We will continue being the safe and secure place where everybody can access crypto.”

An audited proof of reserves report will be published within weeks, he said, and that the exchange did not engage in any “irresponsible lending products”.

The ‘AMA’ (ask-me-anything) came after investors took to twitter over the weekend to question a transfer of $400 million (roughly Rs. 3,250 crore) worth of ether tokens to another exchange called Gate.io on October 21.

Marszalek had tweeted to say the ether was recovered and returned to the exchange, but that failed to calm a jittery market. The Wall Street Journal reported that withdrawals at Crypto.com rose over the weekend after Marszalek’s tweet.

“At no point were the funds at risk of being sent somewhere where we could not get it back. It happened over three weeks ago. It had nothing to do with any of the craziness that has been happening since FTX collapsed,” the CEO said in response to questions, which around 7,000 people watched live.

The cryptocurrency market is already on edge with the spectacular public collapse of FTX last week. FTX had gone from being one of the largest exchanges worldwide to filing for bankruptcy. A Reuters report found that at least $1 billion (roughly Rs. 8,120 crore) of client funds were missing from FTX.

“This has set the industry back a good couple of years in the reputation that we have built,” Marszalek said. “Trust was damaged, if not lost, and we need to focus on rebuilding trust.”

The movement of ether at CryptoCom was discovered by a user who dug through transactions after the company posted its cold wallet addresses online.

CryptoCom is among the top 10 exchanges by turnover globally, but smaller than FTX and market leader Binance. It made headlines in 2021 after it signed a $700 million (roughly Rs. 5,690 crore) deal to rename the Staples Center in Los Angeles as the CryptoCom Arena, and enlisted actor Matt Damon to promote the platform.

Marszalek said CryptoCom had 70 million individual customers worldwide, and had made revenues of a billion dollars in 2021 as well as in 2022.

The platform had moved about $1 billion (roughly Rs. 8,120 crore) to FTX over a year but most of it was recovered and exposure at the time of FTX’s collapse was less than $10 million (roughly Rs. 80 crore), he said.

Asked about why the exchange had 20 percent of its reserves in the meme token Shiba Inu (SHIB), Marszalek said that was because reserves were a direct one-to-one reflection of client holdings and that SHIB and Dogecoin had been hugely popular in 2021.

© Thomson Reuters 2022


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