Crypto.com says balance sheet strong, exchange not in trouble

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SINGAPORE — Singapore-based crypto exchange Crypto.com’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.

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“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.

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“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 worth of ether tokens to another exchange called Gate.io on Oct. 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.

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“At no point were the funds at risk of being sent somewhere they could not be retrieved. It had nothing to do with any of the craziness from FTX,” 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 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 Crypto.com was discovered by a user who dug through transactions after the company posted its cold wallet addresses online.

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

The platform had about $1 billion on FTX earlier this year but current exposure was less than $10 million, he said.

Asked about why the exchange had 20% of its reserves in the meme token Shiba Inu or SHIB, Marszalek 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. (Reporting by Ankur Banerjee and Vidya Ranganathan; additional reporting by Xinghui Kok; Editing by Jacqueline Wong)