The Crypto.com logo is seen on the stand at the Bitcoin Conference 2022 in Miami Beach, Florida on April 6, 2022.
Marco Bello | Reuters
As the Crypto World Considers the Impact of FTX’s Plunge collapse .
Like the FTX you applied for bankruptcy protection On Friday, Crypto.com is privately held, based outside the United States, and offers a variety of services. product To buy, sell, trade and store crypto. The company is headquartered in Singapore and CEO Kris Marszalek is based in Hong Kong.
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Crypto.com is smaller than FTX, but ranks among the top 15 exchanges in the world. coin geckoFTX took the market by surprise not only because of its rapid demise, but because the company was unable to accept withdrawal requests. billions of dollars, from users who want to collect funds while running in the company. When it became clear that FTX didn’t have the liquidity needed to fund its users, fears grew that it could be its next rival.
Twitter lit up last weekend with speculation that Crypto.com was in trouble, and cryptocurrency experts held a Twitter Spaces session to discuss the issue. in the meantime, revelation Landed on Sunday and accidentally sent by Crypto.com in October 80% or more of the Ether held, Or, transfer approximately $400 million worth of cryptocurrency to Gate.io, another crypto exchange.. Marszalek admitted to the accident only after the transaction was made public through public blockchain data..
Crypto.com CEO Kris Marszalek spoke at the 2018 Bloomberg event in Hong Kong, China.
Paul Yang | Bloomberg | Bloomberg | Getty Images
Changpeng Zhao, CEO of rival exchange Binance, fanned the flames of speculation, tweet on sunday If an exchange needs to move a large amount of crypto before or after showing a wallet address, “that’s clearly a sign of trouble”.
Adam Cochran, blockchain project investor and founder of Cinneamhain Ventures, said: Tweet over the weekend. “If they’re full reserves, they shouldn’t mind if you sit on the sidelines for a week, but their response to this is not up to par.”
Marszalek spent the first half of the week doing: reassure users And regulators, business is good. On Monday, he said on YouTube that the company has a “very strong balance sheet” and is conducting “business as usual” in terms of deposits, withdrawals and trading activity. It followed up with a tweet, stating that “the withdrawal queue has decreased by 98% in the last 24 hours.”
he Talked to CNBC’s “Squawk Box” On Tuesday morning, he answered questions about the state of his company, the market, and how he stands differently from FTX. , said it is working with more than 10 regulators on how to prevent them from happening again.
“I understand that in today’s market, we’re in a situation where everyone takes whatever they say,” Marzarek said. “We focused on showing strength and stability through action.”
Marszalek acknowledged that Crypto.com, like other exchanges, has faced an increase in withdrawals since the FTX news broke, but said his platform has since stabilized. rice field.
Skeptics can point to recent history.
FTX CEO Sam Bankman-Fried said the company’s assets were “no problem” two days before he desperately needed a bailout due to the liquidity crisis. It’s a familiar tactic. Alex Mashinski, CEO of the now-bankrupt cryptocurrency lending platform Celsius, said: rest assured customer Solvency days before stopping wtihdrawals and finally filing for bankruptcy.
Exterior of Crypto.com Arena in Los Angeles, CA on January 26, 2022.
Rich Fury | Getty Images
There are other similarities as well.
Just as FTX signed a massive deal last year with the NBA’s Miami Heat to acquire the naming rights to the team’s arena, Crypto.com. agreed to pay $700 million Last November, Tom Brady and Steph Curry, among other LA FTX teams, promoted the product to put their name and logo on the arena that hosts the Los Angeles Lakers. Crypto.com has hired Matt Damon as their pitchman.Acquired by both companies super bowl ad partnered with formula one.
Marszalek also has personal issues from his past.of Daily Beast The Australian company was called Ensogo and offered online coupons. Closed abruptly in 2016.
according to the document submitted Ensogo asked the Australian Stock Exchange to stop trading its shares in June 2016.The board accepted Marszalek’s resignation at that time, and the company filing “We have not yet announced the appointment of a new CEO,” he said.
A Crypto.com spokesperson told The Daily Beast that the board had decided to shut down Ensogo and that “under Chris’ leadership, no wrongdoing was ever uncovered.”
Then there’s the Crypto.com book.
Last week, Crypto.com released unaudited information about its assets to blockchain analytics firm Nansen. Nansen used that information to create a chart showing where those assets are held. 1 amazing revelation: Crypto.com held 20% of its assets in a Shiba Inu wallet. It is a so-called “meme token” that exists purely for speculation and is built from the Shiba Inu image of dogecoin, an equally popular joke token.
Marzarek said on Monday that this is merely A reflection of the assets that Crypto.com customers were buyingIn a tweet, he said it would be a popular buy in 2021 alongside Dogecoin.
When asked by CNBC on Tuesday whether Crypto.com has tokens on its balance sheet, Marzarek said the company is a “very conservative bank” holding “predominantly fiat currencies and stablecoins as a source of capital.” It is a business operated by
“Yeah, but how much?” asked CNBC’s Becky Quick, reminding Marszalek that there were “billions” in self-created FTT tokens before FTX declared bankruptcy.
Marzarek declined to comment.
“We are a privately held company,” he said, adding that he would not provide details “about our balance sheet.”
He was quick to say the company was “very well capitalized,” echoing comments from Monday’s YouTube session, saying the company has a “very strong balance sheet.” Cash flow is positive. ”
The company has already been hit by the crypto winter, with Bitcoin and Ether dropping by two-thirds this year. In recent months, Crypto.com has reported: cut more than a quarter of its workforceCRO daily trading volume dropped to about $365 million, According to data from NomicsLast year, that figure topped $4 billion.
Marszalek’s main goal is clear. That is to avoid his FTX-type execution, where the company could lose a large amount of customers. However, he also wants to be very clear that all reserves are available to accept withdrawal requests and that no hedge fund activity is taking place on user deposits.
“We run a very simple business,” he said. “We will provide her 70 million users worldwide with access to digital currency and pay for it.”
Blockchain.com CEO Peter Smith expects a dramatic shift in the entire way cryptocurrency enthusiasts hold their investments. Smith, who runs the exchange and offers cryptocurrency wallets, told CNBC last week that consumers would not have to trust a third party to hold their cryptocurrency funds. I do more on my own.
“We’ll see people move to crypto with their own private keys,” Smith said, adding that the company already has about 85 million users doing crypto. The ultimate reality and the coolest part is that you can store your funds in your own private key with no counterparty exposure.”
From a governance perspective, FTX had a unique problem. Despite raising billions of dollars from top companies like Sequoia and Tiger Global, the company had no board of directors, no finance officer, no compliance officer. $32 billion valuation.
Marzarek is more traditional corporate structureCrypto.com has a four-member advisory board and a CFO, General Counsel, and Senior Vice President of Risk and Operations. This doesn’t mean that scams (see Theranos) and bad behavior (see WeWork) don’t exist, but at the very least, as Crypto.com and other players try to survive the crypto winter, some It shows that control is being done. It gets colder and colder.
“We are very happy with where we are as a company and what we do,” Marzalek said, noting that the company generated more than $1 billion in revenue last year and surpassed that number this year. “What worries me is the impact this collapse will have on the industry as a whole. It will set us back a few years in terms of industry reputation.”