Accident or Excuse?

With the whole FTX scandal occurring, it has become increasingly important for exchanges to prove that they have user funds stored offline in cold storage. Crypto.com was one of those exchanges running to prove to users that their exchange was fine. So what’s the problem? A community member raised a concern about a transfer from one of Crypto.com’s cold storage wallets. Let’s take a closer look to see what happened.

• Crypto.com accidentally sent 320k ETH (roughly $400 million worth) to Gate.io. Crypto.com CEO, Kris Marszalek, reassured investors that the funds were returned to the original wallet and that there were features implemented to prevent a reoccurrence.
• A Crypto.com spokesperson said that the whitelisted address on Gate.io was owned by the company. That still does not excuse how such an accident occurs.
• On-chain data shows that 285K ETH was returned back to Crypto.com. There was, however, 35K ETH that was sent to a different address which has yet to be confirmed by the company.
• CZ has been actively telling crypto enthusiasts to be careful of cascading effects from the FTX situation. He tweeted, “If an exchange have to move large amounts of crypto before or after they demonstrate their wallet addresses, it is a clear sign of problems. Stay away. Stay #SAFU.“

Was this an accident or should users be concerned? Users should continue to practice crypto security and not be reliant on exchanges. If one is using exchanges, it is important for one to know the risks one is taking.