As regulators scrutinize FTX, investor focus swings to Crypto.com

SINGAPORE  – The fallout from the collapse of crypto exchange FTX kept bitcoin and other cryptocurrencies under pressure on Monday, with market participants worrying about heavy withdrawals at Singapore-based exchange Crypto.com.

Crypto.com tweeted that its chief executive Kris Marszalek will go live on YouTube to answer questions around some transactions on the platform that had sparked speculation 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.

The questions around a transfer of a big chunk of ether tokens last month from Crypto.com to another platform were raised by an user who dug through transactions after the company posted its cold wallet addresses online.

While Marszalek tweeted to say the ether, worth about $400 million, had been accidentally transferred and was recovered, his comments failed to allay concerns in a market already on edge after the spectacular public collapse of FTX last week.

The Wall Street Journal reported that withdrawals at Crypto.com rose over the weekend after Marszalek’s tweet. Twitter users pointed to other transfers between some other smaller platforms and exchanges as possible evidence that they were leaning on each other to shore up reserves.

Bitcoin slid further to below $16,000, taking losses for the month to 22.5 percent, while FTX’s token was at $1.60 and down 94 percent in November. Crypto.com’s token Cronos has halved in the past 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.”

Crypto.com is among the top 10 exchanges by turnover globally, but smaller than FTX and market leader Binance. It made headlines in 2021 after it signed a $700 million deal to rename the Staples Center in Los Angeles as the Crypto.com Arena, and got actor Matt Damon to promote the platform.

FTX contagion

Meanwhile, the effects of the collapse of Bahamas-based FTX, which filed for bankruptcy on Friday after a rush of customer withdrawals and a failed rescue deal with rival exchange Binance, continued to affect markets.

Bahamas securities regulator and financial investigators are investigating potential misconduct over the collapse of cryptocurrency exchange FTX, the Royal Bahamas Police Force said on Sunday.

Bloomberg news reported exchange AAX had halted withdrawals.

Visa Inc, the world’s largest payments processor, said on Sunday it was severing its global credit card agreements with collapsed crypto exchange FTX.

Binance chief executive Changpeng Zhao meanwhile tweeted that the exchange had never short-sold FTT tokens.

Zhao abandoned a deal with FTX chief Sam Bankman-Fried (SBF) last week to buy FTX’s non-U.S. assets, precipitating the bankruptcy.

He has since warned of a “cascading” crypto crisis and on Monday called for clearer crypto industry regulation.

“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.