CryptoNov 14, 2022
Is Crypto.com in trouble, and should you get your crypto out?
Platform Solvency
Victor Lei
Discover
FUD… FUD everywhere.
After last week’s events, users are questioning the safety of other crypto exchanges. The next victim, Crypto.com?
Yes, the Singapore-based crypto exchange that famously renamed the Los Angeles Staples Center to Crypto.com Arena in 2021.
On Nov. 11, Crypto.com released a Proof of Reserves audit to show that the custodian crypto exchange actually holds what it owes clients.
In the audit, it was discovered that Crypto.com accidentally transferred $400M (82% of their ETH holdings) to the wrong account in October — which it later recovered.
Crypto Twitter began speculating on the health of the exchange.
On Monday, Crypto.com’s CEO held an AMA to ease concerns.
Short answer, assume no centralized exchanges (i.e., Coinbase, KuCoin, Crypto.com, Gate.io) are safe.
Basically, every exchange out there: “DW, your assets are safe.”
But also FTX, four days before it filed for bankruptcy: “Assets are fine” (Tweet now deleted).
Last week, Coinbase (NASDAQ:COIN) released a statement saying:
But it’s difficult to ignore Coinbase’s newly added disclosure this year, which basically says if Coinbase goes bankrupt, it can use your crypto to pay back lenders before paying you.
“Not your keys, not your crypto” is one of the most important phrases in crypto. What does it mean?
In one sentence: Centralized crypto exchanges have control over your tokens held inside the exchange.
To avoid an FTX situation, follow some basic rules of crypto:
Also, learn the difference between centralized and decentralized exchange. It’s a bit more complicated, but it could save you lots of money and pain.
