- Crypto.com’s cold storage revealed a suspicious transfer of 320,000 Ether worth $404 million, to Gate.io.
- Kris Marszalek, CEO of Crypto.com assured traders that the transfer was accidental, funds were to be moved to a new cold storage address.
- Experts allege that the transfer helped Gate.io show its proof of reserves of user funds shortly after the transfer.
Samuel Bankman-Fried’s FTX exchange collapse highlighted the importance of proof-of-reserves for centralized exchanges. When confirming the availability of funds on Crypto.com, cold storage information revealed a suspicious transfer of 320,000 Ether to Gate.io.
Gate.io completed its proof-of-reserves audit shortly after, arousing suspicion of experts and analysts on crypto Twitter.
Gate.io finishes proof-of-reserves after receiving 320000 ETH transfer
The FTX collapse has raised concerns among crypto traders regarding safety of user funds in exchanges’ cold storage. Exchanges started publishing proof-of-reserves to steer clear of the issues that surrounded FTX exchange before its collapse.
Gate.io completed its proof-of-reserves audit on October 28, 2022, merely days after receiving $404 million worth of Ethereum from Crypto.com. When investigating transactions by Crypto.com, on-chain analysts identified a suspicious 320,000 Ether transfer to Gate.io. Kris Marszalek, CEO of Crypto.com explained this transfer was accidental. Crypto.com intended to move user funds to a new cold storage address, but an accident resulted in the transfer to Gate.io.
Ethereum transfer from Crypto.com to Gate.io
Interestingly, within days of the accidental transfer, Gate.io published its proof-of-reserves report. Solidity developer and on-chain analyst Shegen published evidence of the same on Twitter:
Audit assessment of Gate.io exchange
The move by Crypto.com has raised several unanswered questions for crypto traders. FTX exchange’s co-mingling of finances with Alameda research and loss of user funds, reflecting zero balances have raised red flags.
Traders on crypto Twitter are worried about Crypto.com and Gate.io’s user funds and authenticity of proof-of-reserves. Since Crypto.com claims that 100% of user-owned cryptocurrencies are held offline in cold storage, it has raised concerns among traders as to the authenticity of the claim.