ALBAWABA — Cronos, the native token of Crypto.com tumbled to a 22-month low on Monday amid growing scrutiny and negative sentiment towards centralized exchanges after the collapse of major player FTX earlier this month.
The token slumped 28% to $0.0557, halving in value over the past week as investors feared a potential liquidity crunch similar to that seen at FTX, many doubting claims by Crypto.com that it was a regulated, trustworthy crypto business.
The Crypto.com exchange and wallet provider is getting some scrutiny from the crypto community as analytics provider Lookonchain revealed the exchange holds a total of $2.68 billion in digital assets in Ethereum wallets and six Bitcoin wallets and $80 million in its own token.
Crypto.com’s claims that all user funds are held offline in cold wallets were contradicted after blockchain records on Etherscan showed it had accidentally sent about $400 million or 82% of its Ethereum reserves to a wallet linked to Gate.io on October 21 just before Gate.io provided proof-of-reserves to its users on October 28 as part of a new push for transparency after the FTX crisis.
While Gate.io subsequently returned the funds on October 29, traders said the transfer escalated concerns over Crypto.com's financial position, and its "true" untransparent reasons for the back-and-forth transfer, especially after reports that Crypto.com had withdrawn 210 million USDT from Binance and 50 million USDC from Circle before it released its proof-of-reserves announcement on November 12.
Crypto.com also drew ire for having over 20% of its reserves in memcoin Shiba Inu. According to data, it has $531 million in Shiba Inu compared to $446 million in Ethereum.
“If you have funds on Crypto.com, please pay attention to the safety of your funds. They hold a lot of $SHIB and $CRO,” Lookonchain said.
Binance CEO Changpeng Zhao on Saturday 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.”
