Following the collapse of cryptocurrency exchange FTX last week, pressure on bitcoin and other digital currencies persisted on Monday, despite efforts by other exchanges to reassure uneasy investors of their own soundness.
In a YouTube Livestream address, Kris Marszalek, the CEO of Singapore-based cryptocurrency exchange Crypto.com, denied rumours that the business might be in difficulty and promised to disprove all doubters.
The “AMA (ask-me-anything)” session was held after investors questioned a $400 million transfer of ether tokens to the Gate.io marketplace over the weekend on Twitter.
The Wall Street Journal claimed that transactions at Crypto.com increased throughout the weekend, despite Marszalek’s Sunday tweet claiming that the ether had been found and returned to the exchange.
Marszalek stated on Monday that the exchange did not take part in any unsafe lending products and that audited evidence of the exchange’s reserves report will be issued in the coming weeks.
FTX and dominant player Binance are larger exchanges than Crypto.com, which is among the top 10 by turnover globally. By agreeing to a $700 million deal to rename the Los Angeles Staples Center as the Crypto.com Arena and enlisting actor Matt Damon to promote the platform, it made headlines in 2021.
One of the most high-profile cryptocurrency meltdowns, FTX filed for bankruptcy on Friday after traders rushed to remove $6 billion off the platform in only 72 hours and competitor exchange Binance ditched a planned rescue package.
On Saturday, it reported discovering unauthorized access and analysts said that hundreds of millions of dollars worth of assets had been withdrawn off the network under “strange circumstances.”
John J. Ray III, the newly appointed chief executive of FTX, stated on Saturday that the business was cooperating with law enforcement and authorities to address the issue and was making “every effort” to safeguard assets. Sam Bankman-Fried, a former CEO and the founder of FTX, has previously claimed that unclear internal labelling was to blame for some of the transfers out of FTX.
On Sunday, a different cryptocurrency exchange, Kraken, said on Twitter that it had frozen the accounts of FTX, its partner, Alameda Research, and its management.
A Kraken representative stated in a statement that the team has been closely following recent developments involving the FTX estate, is in communication with law enforcement, and has restricted access to specific funds that they feel are linked to fraud, negligence, or wrongdoing regarding FTX.
Early on Monday, Bitcoin fell below $16,000 before climbing back up to trade at $16,774, up 2.8% for the day. The market is still on track for its largest monthly decline in percentage terms since June, when the impact of the demise of stablecoin TerraUSD erupted markets, with declines in November so far hovering at 18%.
According to the website Coingecko, the Cronos token from Crypto.com has dropped in value by halving in the last week to $0.06, while FTX’s token was only worth $1.3, down 94% from November.
Investors are uneasy following FTX’s collapse as unfounded rumors circulate despite exchanges publishing information on their reserves and promising additional disclosures.
Zennon Kapron, the CEO of fintech consultancy Kapronasia, claimed one of the speculations going around is that exchanges are shifting cryptocurrency around to support their holdings and make everything appear positive even though it’s anything but,
Comparable to someone displaying a bank statement indicating that someone had $100 in their account at 2:00 today afternoon. If it was $1 at 1 p.m. and somebody just wired them $99, they might be repaying it at 4 p.m. The audience can learn essentially little about the overall health of an exchange from just a snapshot.
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