In today's edition of YIYL (You Invest, You Lose), We head back to the dumpster fire that is centralised exchanges, they've been in the news a lot lately as the FTX bank run has opened up their books and we can see that businesses in this space, regardless of how large are clearly not well capitalised.
In FTX's case, a lot of their balance sheet was made up of illiquid loans and illiquid shitcoins that would take months to unwind and there is no guarantee those assets would fetch what is presented on their books.
People freaked out and started to redeem their funds and because assets didn't meet liabilities, they were forced to pause withdrawals.
So why do I mention FTX in a post about crypto.com?
Well, they've not been the greatest custodian of funds, if they're not wasting it on massive marketing campaigns, they're mistakenly sending it to the wrong people.
They also have their own shitcoin, which we all know rugged the previous holders. They had a coin MCO and forced MCO holders to swap it for CRO, so they could dilute everyone, it was a total shit show so it's safe to say they've not been squeaky clean.
There was also a hack on crypto.com in January of this year where 483 accounts lost a combined $14 million. Come on people, where there is smoke there is fire.
If it walks like a duck and quacks like a duck, it's a duck!
The fails keep piling up
If you were holding funds on crypto.com, tell me would you feel more or less comfortable after this interaction on Twitter recently? A user watching their wallets on Etherscan posted screenshots showing a massive flow of crypto from the Crypto.com cryptocurrency exchange to another exchange, Gate.io.
Now, this is already something concerning, you'd fear the worst in the current market, that they were trying to get funds out before they announce a shutdown or something.
If I had funds I'd be questioning a move like this and freaking out too.
"Anyone know why Crypto.com would send 320k ETH (82% of their ETH today) to Gate.io on October 21?", they wrote. "And why Gate.io would send back to Crypto.com 285K ETH 5-7 days later?"
https://twitter.com/jconorgrogan/status/1591516592835559429
- jconorgrogan
Crypto.com's CEO, Kris Marszalek, replied:
"It was supposed to be a move to a new cold storage address, but was sent to a whitelisted external exchange address. We worked with Gate team and the funds were subsequently returned to our cold storage." He later clarified that all of the funds were returned.
https://twitter.com/kris/status/1591610511246102528
- kris
A horror story
Twitter users, reasonably, reacted in horror at the revelation that the platform had accidentally sent such a substantial portion of their funds elsewhere in a careless mistake, and that such a monumental mistake was even possible.
They were lucky that they erroneously sent the funds to another exchange and one who agreed to return the funds, imagine it was some nym with a purchased KYC account who could tumble those funds and it was never to be seen again?
This is not the first time Crypto.com has erroneously transferred funds; in August of this year, they sued a woman to whom they'd accidentally sent $7.2 million that wasn't hers. So they clearly have a history now of mishandling funds so why would you be trusting them with your funds?
Now if that hasn't scared you enough, crypto.com has also released it's balance sheet, with 20% of it shitting in an illiquid shitcoin like Shib, why would thar give you any sense of confidence?
Image source: - dailyhodl.com
If I were a crapto.coom user I would be liquidating as fast as possible, fortunate might not favour the brave on this one. If they do end up putting you in forced hodl mode, remember me, remember this warning and remember that you ignored it because you wanted "yield"
Have your say
What do you good people of HIVE think?
So have at it my Jessies! If you don't have something to comment, "I am a Jessie."
Let's connect
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