In a youtube "ask me anything" interview on Monday, Kris Marszalek, the CEO of the cryptocurrency exchange Crypto.com reassured customers of his platform of the safety of their funds, after fears of the (potential) ripple effects of the collapse of rival firm FTX swept through the market.
According to Marszalek, Crypto.com has a "tremendously strong balance sheet" and isn't at risk of the problems that plagued and eventually led to the crash and burn of FTX last week.
He goes further to say that the company supplied large-sum stablecoins to the troubled cryptocurrency exchange FTX to fulfill liquidity inside clients' orders at the time when FTX was still operational. However, crypto.com has recovered all of this, and his exchange only had about a $10 million exposure when FTX went under.
In Marzaleck's words,
"Over a year, $1B was moved to FTX and we recovered all of this. We only had exposure of under $10 million when FTX shut down. And FTX was a trading venue where this is one of the few trading venues with decent liquidity for some of the coins like the ones I mentioned earlier."
Marszalek said in the interview, that the exchange would not be stopping withdrawals anytime soon.
He made this comment despite the growing backlog of customer service tickets on the exchange. According to Marszalek, only three coins including two FTX tokens and one securitized token have their withdrawal capabilities on the exchange suspended.
Addressing the allegations that Crypto.com was using its native token, Cronos [CRO] as collateral for loans, Marzaleck mentioned that Crypto.com has never used it, and has never needed to. He goes further to point out that the exchange has a "very simple business". This business, he says, is one" that generates a decent amount of revenue".
"Crypto.com as a company never employs any careless lending techniques. It never runs a hedge fund and never takes any risks with third parties."
Marszalek says. Customers' assets are not traded by the business, he continued. "We always keep a 1-to-1 reserve."
Following the collapse of FTX, Crypto.com experienced a surge in withdrawals similar to those experienced by several other exchanges after it came to light on Sunday, that it "mistakenly" sent $400 million worth of Ethereum to Gate.io, another cryptocurrency exchange back in October.
This supposed mistake by Crypto.com, is one of the single largest sparks that led to worries that Crypto.com users' funds might be at risk.
However, both Crypto.com and Gate.io have since clarified that these funds were transferred in error and were promptly refunded once the mistake was discovered.
On Sunday, Marszalek mentioned that the company had intended to transfer the assets to its "cold wallet," but they were instead transferred to a whitelisted corporate account owned by Gate.io by a complete mistake.
"All assets have since been restored to Crypto.com", says Gate.io, which also claims that the transaction was a result of an "operation error transfer."
Finally, at the end of the interview, Marszalek responded to users who questioned why almost 20% of the exchange's reserves are in the memecoin, Shiba Inu. He mentioned that last year, DOGE and SHIB were two of the most bought and traded cryptocurrencies and that people held them longer than all the others.
Because of this, Crypto.com is left with 20% of its reserves as Dogecoin and Shiba Inu
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