Crypto.com Reassures Investors After FTX Collapse

The chief executive of Singapore-based cryptocurrency exchange Crypto.com has said the platform is in good financial health, following the spectacular collapse of FTX last week.

In a livestreamed address on YouTube, Crypto.com chief executive Kris Marszalek said the platform maintained reserves for every coin held on the platform.

“We will continue being the safe and secure place where everybody can access crypto,” he said, adding that the company would “prove all the naysayers… wrong with our actions”.

Investor jitters

Marszalek said an audited proof-of-reserves report would be published within weeks and that the exchange did not engage in “irresponsible lending products”.

The address followed remarks by users on Twitter over the weekend who questioned the transfer of $400 million (£338m) of Ether coins to exchange Gate.io on 21 October.

Marszalek replied on Twitter that the Ether coins had been returned to Crypto.com, but investors remained wary and reports said withdrawals at Crypto.com rose after Marszalek’s tweet.

During the address, Polish national Marszalek said the funds in question were “at no point” at risk of being “sent somewhere where we could not get it back”.

‘Craziness’

“It had nothing to do with any of the craziness that has been happening since FTX collapsed,” he said in response to questions from a live audience of 7,000 users.

He acknowledged that “trust was damaged, if not lost” by the FTX collapse and said the crypto industry needed to “focus on rebuilding trust”.

FTX was one of the biggest crypto exchanges before filing for bankruptcy on Friday.

A balance sheet shown to investors shortly before its collapse, reported by the Financial Times and others, indicated FTX had only $900m in easily sellable assets against $9bn in liabilities.

High profile

Additional irregularities with FTX came to light immediately after the bankruptcy filing, including an outflow of unauthorised crypto withdrawals estimated at $477m by blockchain analytics firm Elliptic, which is being investigated as a suspected theft.

FTX and Crypto.com both achieved a high profile in the past few years, with FTX putting its logo on the Miami Heat arena in 2021, the same year that Crypto.com signed a $700m deal to rename the Staples Center in Los Angeles to the Crypto.com Arena.