Investors Pull Funds From Crypto.com After $400M Mishap

Cryptocurrency exchange Crypto.com is trying to reassure investors following a weekend that saw customers pull millions in funds after its chief executive announced that the company had mishandled a $400 million transaction.

The news comes at a precarious time for the crypto industry, following the fast-moving collapse last week of the FTX exchange.

Kris Marszalek, CEO of the Singapore-based exchange, said on Twitter the transfer was sent to the wrong type of account on a different exchange.

The transfer, involving the cryptocurrency ether, happened on Oct. 21, and came to light when Twitter users noticed the transfer was unusual, The Wall Street Journal (WSJ) reported Monday (Nov. 14).

The report cites an analysis of Crypto.com’s public blockchain from Argus Inc. showing that users withdrew $14 million in ether and $39 million in other tokens connected to the Ethereum network during a 10-and-a-half hour stretch between Saturday and Sunday.

At that same time, Crypto.com shifted $33 million from other wallets to keep up with user demand. The company appeared to have sufficient funds to handle customer withdrawals, Owen Rapaport, co-founder of Argus, told the WSJ.

Following the revelation, Marszalek took to YouTube to reassure the world that his company was not in trouble, saying Crypto.com would prove its “many” naysayers wrong.

Marszalek added that the company will publish an audited proof of reserves report in the coming weeks. He said Crypto.com did not use “irresponsible lending products.”

As PYMNTS noted Sunday (Nov. 13), Crypto.com is one of several companies – along with Binance, OKX, and Derebit – who have pledged to offer up evidence that they have enough reserves to match customers’ liabilities following the FTX collapse.

Coinbase also moved to differentiate itself from FTX, apparently emailing customers late last week to stress how its “business is different and ultimately better protects” client assets.

Speaking to PYMNTS’ Karen Webster in an interview published Monday, BitPay CEO Stephen Pair said his company had no exposure to FTX.

“A lot of people — investors in particular — are going to be a lot more cautious and a lot more skittish about making investments in this space,” Pair predicted.