By
Bena Ilyas
April 23rd, 2024
Crypto.com clarifies it did not lose $1 billion in crypto to FTX but instead lost a much smaller $10 million stake.
Crypto.com recently addressed public concerns regarding the financial health of the crypto exchange following the collapse of rival company FTX. According to Crypto.com CEO Kris Marszalek, the Singapore-based exchange recovered $1 billion in digital currency from FTX before it went under. However, Marszalek added that Crypto.com lost a $10 million exposure to the FTX crash. Furthermore, he explained that the exchange hedged some of its customer orders with the ill-fated Sam Bankman-Fried venture out of liquidity concerns. According to Marszalek, FTX was one of a few exchanges with decent liquidity at the time.
Crypto.com Continues to Set Record Straight Regarding FTX Fallout
Marszalek’s recent comments clarifying Crypto.com’s financial state come after reports on social media suggested the company lost $1 billion to FTX. There also was an earlier investor concern regarding an Ether transfer worth $400 million to another exchange, Gate.io, on October 21st. In response, the Crypto.com chief executive said the Gate transfer was due to human error, and all funds have since been recovered. Marszalek explained that a collaboration with the Gate team ended with the funds reversed. He also suggested that Crypto.com would continue to use its track record to prove naysayers wrong:
“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.”
Earlier reports also stated that Crypto.com experienced a surge in withdrawals following Marszalek’s comments on the accidental Ether transfer.
In a live-streamed YouTube session, Marszalek responded to reports that Crypto.com had lost funds:
“At no point were the funds at risk of being sent somewhere where we could not get it back. It happened over three weeks ago. It had nothing to do with any of the craziness that has been happening since FTX collapsed.”
Marszalek also noted that Crypto.com raked in revenue of $1 billion between 2021 and 2022. In addition, the company’s chief executive also stated that it did not engage in any “irresponsible lending products”. The crypto exchange plans to have an external audit report in the coming weeks. This report is to prove its financially sound balance sheet.
FTX Crash
The crypto marketplace is still reeling from the spectacular collapse of FTX, once the second-largest exchange in the world. Last week, the company filed for Chapter 11 Bankruptcy in the United States, with Bankman-Fried resigning as CEO.
FTX’s financial turmoil shocked investors as it happened in an accelerated timeframe. The reason is that barely a week ago, the company boasted a lofty valuation of $32 billion and seemed to be coasting. However, a sequence of allegedly ill-timed and misinformed decisions from its top management triggered a mass wave of customer withdrawals from the exchange. This deluge of withdrawals saw FTX needing at least $8 billion in funds to stay afloat.