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Notably, the accidental ETH transfer is not the first of its kind for Crypto.com. The crypto firm made headlines when it said it had accidentally sent AUD$10.5 million to a client.
Crypto.com CEO Kris Marszalek revealed that the exchange mistakenly transferred 320,000 ETH to the wrong ETH address. Apparently, the transferred crypto asset was 82% of the exchange’s entire ETH holding in the cold storage. According to blockchain records on Etherscan, Crypto.com accidentally sent the ETH to rival exchange Gate.io just before the latter presented its proof of reserves to users.
Providing proof of reserve as an exchange has become a vital process in the crypto community following the fall of FTX.
Crypto exchanges are now publicly listing their cold and hot wallet addresses, reducing risks and solidifying investors’ confidence. While confirming available funds on Crypto.com, cold store information revealed the transferred asset and identified Gate.io as the recipient. A Twitter user raised concerns about the ETH transfer from Crypto.com to Gate.io. In response, Marszalek explained:
“It was supposed to be a move to a new cold storage address, but was sent to a whitelisted external exchange address.”
However, Gate.io has subsequently returned the ETH to Crypto.com.
“We worked with Gate team and the funds were subsequently returned to our cold storage. New processes and features were implemented to prevent this from reoccurring.”
He added that the company’s dollar balance on Gate is in the “single digit USD million balance.”
Gate.io Returns ETH Mistakenly Transferred by Crypto.com
Even though Marszalek said all funds were returned, on-chain data shows that Gate.io only retired 285,000 ETH to Crypto.com. Investigations reveal that the balance ETH was forwarded to an unidentified wallet address. Additionally, the CEO said the transactions which sent “FUD & speculation” across Twitter happened weeks ago, on the 21st of October.
Notably, the accidental ETH transfer is not the first of its kind for Crypto.com. The crypto firm made headlines not long ago when it said it had accidentally sent AUD$10.5 million to a client. Meanwhile, the exchange was to issue an AUD$100 refund to the recipients. The mistake was a result of an employee typing an account number in the payment section. While the incident happened in May 2021, the matter came to the limelight in December 2021 after an annual audit. It turned out the recipient had used the funds to acquire a five-bedroom luxury home in Craigieburn. However, the Victoria Supreme court ordered the sale of the property and a complete refund.
Following the latest accidental ETH transfer, Crypto.com saw its native token, Cronos, drop more than 50% for the week. Binance chief CZ also warned investors to “stray away” from an exchange that has to “move large amounts of crypto before or after they demonstrate their wallet addresses.” He added that it is a “clear sign of problems.”