CEO of Crypto.com claims the exchange does not handle CRO the way FTX utilized FTT to assuage investor concerns.
Kris Marszalek, CEO of Singapore-based exchange Crypto.com, claims that the exchange has never utilized its native currency, Cronos (CRO), the way FTX used FTX Coin (FTT), which includes making shady decisions such as using it as collateral. Kris’ remarks surface amidst growing concerns of insolvency surrounding Crypto.com.
FTX’s debacle was triggered by several trades and investment decisions that the entire cryptocurrency community has regarded as imprudent. One such decision is how the exchange used its native token, FTT, especially for trades and using it as collateral.
Amid the growing concerns about Crypto.com’s insolvency, several proponents believe the Singapore-based exchange is oddly similar to FTX and might be following in its footsteps. Kris seeks to dispel these claims as he sheds more insight on how the exchange treats CRO on Tuesday’s CNBC Squawk Box episode.
“We’ve never utilized it in the way that FTX did – we never used it as collateral for any loans or anything. We run a very simple business. We are a regulated business – we’ve got licenses in all major jurisdictions,” Kris commented.
— Squawk Box (@SquawkCNBC) November 15, 2022
He also maintained that despite being launched by Crypto.com, Cronos remains an open-source, decentralized project housing about 400 projects currently building on it. He likened Cronos to a miniature version of the much-versatile Ethereum, noting that they are only an “open-source contributor.”
Kris noted that their mode of operation is completely different from what was witnessed with FTX, highlighting their licenses of operations as opposed to FTX’s unlicensed derivatives exchange and hedge fund operation.
Throughout this year, Crypto.com has been on a license acquisition rampage which has been regarded as commendable by the broader crypto community. In August, the exchange received registration approval as a crypto asset business in the UK. It also received a new license in South Korea in the same month. Before then, in June, Crypto.com procured a provisional approval license in Dubai. Within the same month, it received an in-principle license from the Monetary Authority of Singapore. French authorities also granted the exchange regulatory approval in September.
Despite these promising developments, investors’ confidence has been tested amidst questionable transactions recently carried out by Crypto.com as the heat from the FTX saga forces centralized exchanges to reassure their customers of liquid reserves.
On Sunday, blockchain surveillance platform Lookonchain disclosed some information regarding Crypto.com’s reserves, raising a few questions. Per data from Lookonchain, the exchange’s wallets hold a cumulative balance of $2.68B. Out of this, $80M is in CRO, $857M in BTC and $531M is in SHIB. Additionally, 40% of its holdings are in low-liquidity assets like ELON.
Furthermore, Lookonchain revealed that Crypto.com withdrew about $210M in USDT from Binance and $50M from Circle just before the exchange announced its proof of reserves. This revelation has raised questions amongst investors. These and several other indicators have contributed to the FUD surrounding the exchange.
Amidst the panic, CRO has been underperforming along with the rest of the markets, as it dipped to shocking lows. Despite a slight gain in the past 24 hours, the asset has plummeted by 35% in the past week, making it one of the highest-losing assets in 7 days. CRO currently trades at $0.073 as of press time.