Cryptocurrency exchange Crypto.com mistakenly sent 320,000 ETH to a wallet address linked to Gate.io in late October. While the platform has since recovered the assets, Binance CEO Changpeng Zhao advised users that it is best they stay away from the platform.
The unprecedented collapse of FTX, once the third largest cryptocurrency exchange that earned itself a reputation as crypto’s bail-out king during the recent crypto meltdown, led to many in the crypto industry voicing concern over the reliability of centralized players.
In a bid to address this skepticism, crypto executives started to share proof of reserves. For one, Crypto.com published its crypto addresses, revealing how much and what cryptocurrencies it stores on behalf of its customers.
However, users were quick to determine a suspicious transfer of 320,000 ETH to a wallet address linked to Gate.io on Oct. 21, 2022, largely because the exchange claims that all user-owned cryptocurrencies are held offline in cold storage in partnership with hardware wallet provider Ledger.
Crypto.com CEO Kris Marszalek revealed that the transaction was a mistake. "It was supposed to be a move to a new cold storage address, but was sent to a whitelisted external exchange address," he said, adding:
"We worked with the Gate team and the funds were subsequently returned to our cold storage. New process and features were implemented to prevent this from reoccurring."
Despite the explanation, the crypto community is left with a sour taste of the platform. Many crypto users have questioned how it is possible to accidentally send a whopping $400 million worth of ETH to an address that was not the designated receiver.
Notably, it’s not the first time Crypto.com has made such a mistake. In August, the exchange made headlines after it was revealed that it accidentally sent AUD $10.5 million (worth over $7 million) to Melbourne-based investors instead of an AUD $100 ($67) refund. What makes it worse is that the incident occurred in May 2021, and went unnoticed until December 2021.
Meanwhile, Binance CEO CZ, who has been in the news recently due to his involvement in the FTX saga, advised users to stay away from Crypto.com, claiming that it is a clear indication they are not competent enough.
"If an exchange have to move large amounts of crypto before or after they demonstrate their wallet addresses, it is a clear sign of problems. Stay away. Stay SAFU," he said.