After what The world’s third largest cryptocurrency exchange will become insolvent, fear spread throughout the industry. A good example is the Crypto.com exchange that broke a transaction record after its users tried to withdraw their cryptocurrencies en masse. According to on-chain data, the exchange made around 90,000 transactions this Sunday (13) alone. On ordinary days, this number is around 5,000 transactions, that is, there was an 18-fold increase in withdrawal requests.
With investors panicking, transactions on the Crypto.com exchange hit record highs. Source: Etherscan. Another point that could be causing fear among investors was the news that Crypto.com sent $2 billion worth of ETH to the wrong address. According to Kris Marszalek, CEO of Crypto.com, those funds ended up in the hands of Gate.io, but have since been returned. The transaction was made in October, before the FTX bankruptcy, but it was only known in the last week. Some users were surprised that Gate.io, the recipient of the funds, conducted a fund audit close to the date of the multi-million dollar transaction, commenting that both could be falsifying reports.
Users report problems with withdrawals at Crypto.com
Reports from some Twitter users point out that Crypto.com is slow to process withdrawals. According to a survey of cryptoreportOthers also complain about the difficulty of withdrawing specific cryptocurrencies like Hedera (HBAR).
“Okay, I sent some funds back to Crypto.com to test if the withdrawals are working. I have never had a problem because it is usually instantaneous. But it’s been more than 4 hours.” reports an user.
Hours later, the same user comments that his withdrawal request has been completed. “It’s better to prevent than to cure”, he concluded. Other Tweet with over 300 responses it asks if users really have problems with withdrawals. Most of the feedback is that there are no issues and all the fuss is just FUD, an acronym for Fear, Uncertainty, and Doubt.
Why do people fear that Crypto.com will be insolvent?
Crypto.com’s fear of insolvency could be related to its similarities to FTX, which left millions of customers lost last week. While FTX has the FTT token, Crypto.com has the CRO, for example. Going further, both spent millions on Super Bowl ads. While FTX brought Larry David, Crypto.com created an ad featuring NBA star LeBron James, but he is best remembered for another ad featuring Matt Damon.
“Fortune favors the brave”.
The similarities remain, after all, Crypto.com acquired the naming rights to the Staples Center, the famous stadium for the Los Angeles Lakers, just as FTX did to a stadium in Miami. That is, people suspect that this excessive marketing is a red flag, something that was ignored in the case of FTX. So while it’s impossible to know if Crypto.com is insolvent or not, whoever withdraws their crypto first is least at risk.
Crypto.com CEO talks about the rumors
In a busy week, Kris Marszalek spent the week responding to allegations and participating in interviews for various outlets. According to the CEO of Crypto.com, his exchange does not have liquidity problems and will prove it as the number of withdrawals increases.
“Crypto.com CEO Downplays FTX Contagion Fears, Says He Will Prove Opponents Wrong As Withdrawals Rise”notes a CNBC headline shared by the CEO of Crypto.com.
However, this was not enough to calm the community. After all, FTX’s Sam Bankman-Fried also tried to reassure with similar lines, which convinced even the most naive, but turned out to be false.
Withdrawal Requests in the Cryptocurrency Industry Became Contagious
Crypto.com is not the only one working overtime to process customer withdrawals. According to nansen datathe exchanges Binance, Huobi and Gate.io are the three that are registering more withdrawals than deposits from their platforms.
The flow of withdrawals in the brokerage houses increases with the market panic. Source: Nansen. In another image, Nansen points out that most withdrawals are made at the USDT stablecoin, a total of $24.3 million. It is followed by the withdrawals of ETH and USDC, with 11.7 and 10.7 million dollars, respectively, in just one hour. Note, however, that only ETH and ERC20 token withdrawals were observed. Finally, the FTX bankruptcy it is a reminder that no institution can be trusted and that we must keep our cryptocurrencies in our own custody. After all, That’s why Satoshi Nakamoto created Bitcoin.
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