Bitcoin and other cryptocurrencies were under pressure on Monday as a result of the fallout from the collapse of the cryptocurrency exchange FTX, with market participants concerned about significant withdrawals from the Singapore-based exchange Crypto.com.
Crypto.com announced via Twitter that its CEO Kris Marszalek will go live on YouTube to address queries regarding some platform transactions that had sparked rumors and fund withdrawals.
“A lot has happened in the last week and there are a lot of questions which we want to address,” the exchange said.
A user who looked into transactions after Crypto.com posted its cold wallet addresses online raised concerns about a large transfer of ether tokens from that platform to another one last month.
Marszalek tweeted that the $400 million worth of ether had been accidentally transferred and recovered, but his words did not calm the market, which was already uneasy following the spectacular public collapse of FTX last week.
Following Marszalek’s tweet, The Wall Street Journal reported that withdrawals at Crypto.com increased over the weekend. Twitter users cited other transfers and exchanges between some other smaller platforms as potential proof that they were relying on one another to bolster reserves.
Bitcoin lost more ground, falling below $16,000, bringing its monthly losses to 22.5%, while FTX’s token was at $1.60 and had lost 94% of its value in November. Cronos, a cryptocurrency on Crypto.com, has decreased by half this week to $0.06
“Trust is at a massive premium because of the transparency or lack of it in this industry. How do you assess which exchange to trust at the moment?” said Leonard Hoh, the Singapore-based Asia-pacific head of exchange BitStamp.
“In reality all firms are being tested on their ability to meet their obligations and compliance controls. The market is asking for real proof. Rather than assuming parties have been acting in good faith.”
FTX and market leader Binance are larger exchanges than Crypto.com, which is among the top 10 by turnover globally. It gained notoriety in 2021 when it agreed to pay $700 million to rename the Los Angeles Staples Center the Crypto.com Arena and secured the endorsement of actor Matt Damon.
Markets were still being impacted by the failure of Bahamas-based FTX, which declared bankruptcy on Friday following a wave of customer withdrawals and a botched rescue attempt involving rival exchange Binance.
The Royal Bahamas Police Force reported on Sunday that the country’s securities regulator and financial investigators are looking into possible wrongdoing related to the demise of cryptocurrency exchange FTX.
Bloomberg News reported that withdrawals had been stopped at AAX.
The largest payment processor in the world, Visa Inc., announced on Sunday that it was terminating its global credit card agreements with the defunct cryptocurrency exchange FTX.
Changpeng Zhao, the CEO of Binance, tweeted that the exchange had never shorted FTT tokens.
The bankruptcy was caused by Zhao’s last-week withdrawal from a deal with FTX CEO Sam Bankman-Fried (SBF) to acquire the company’s non-American assets.
He has since issued a “cascading” crypto crisis warning and on Monday called for more precise regulation of the sector.
“Full disclosure: Binance never shorted FTT. We still have a bag of as we stopped selling FTT after SBF called me. Very expensive call,” Zhao tweeted.
(Adapted from EconomicTimes.com)
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