For the second time, Crypto.com 'accidentally' sends crypto to a wrong wallet address

The crypto community is not buying Marszalek's excuse of transferring crypto to the wrong address by 'mistake'

Published: Nov 14, 2022 08:18:47 PM IST

Image: Shutterstock

Crypto.com has finally admitted that transferring 320,000 Ether worth $404 million to Gate.io was a 'mistake.' According to Crypto.com CEO Kris Marszalek, the company was supposed to send 320,000 cryptos to one of its offline wallets but instead sent them to a 'whitelisted' address belonging to the corporate account at Gate.io. He said,

"It was supposed to be a move to a new cold storage address, but was sent to a whitelisted external exchange address. We worked with Gate team and the funds were subsequently returned to our cold storage. New process and features were implemented to prevent this from reoccurring."

Concerns were raised in the community after a Twitter user highlighted the suspicious transfer. A spokesperson for Crypto.com confirmed that the whitelisted address on Gate.io was owned by Crypto.com. Crypto.com also went out of its way to provide a preliminary set of disclosures. The company shared wallet addresses with blockchain analysis firm Nansen in order to create a dashboard of nearly $3 billion in reserves and other assets.

Gate.io agreed with Marszalek's story and stated on Twitter that the proof of reserves audit did not include the ETH transferred from Crypto.com. The company also disclosed the transaction ID, which confirmed that all funds were returned to Crypto.com. The tweet read,

"Clarifications on @cryptocom's transfer for the sake of transparency & education:

1) Snapshot for PoR audit taken on Oct 19. https://Crypto.com's deposit was not included https://proof-of-reserves.trustexplorer.io/clients/gate.io

2) All 320K ETH were returned https://etherscan.io/tx/0xb426efda7525776e856b414c87ec0d7859e9bccafe727c174c7b51ed7ada6bee…"

Notably, this was the second occasion when Crypto.com 'unknowingly' sent millions of dollars to the wrong address. In August 2022, it was discovered that Crypto.com had sent AUD $10.5 million (worth over $7 million) to Melbourne-based investors in error, despite the fact that the refund was supposed to be AUD $100 ($67). The incident occurred in May 2021 but was not discovered until a December 2021 annual audit.

However, many in the crypto community are sceptical of Crypto.com CEO's explanation and suspect that the transfers are related to the exchange lying about its reserve. Ben Armstrong (BitBoy), a popular Crypto influencer, announced that he was withdrawing all of his assets from Crypto.com and advised others to do the same. He claims that the recent series of events has taught him the value of self-custody.

Shashank is founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist.