Crypto

Crypto.com accidentally sends 320k ETH to Gate.io, gets funds back days later

The fall of FTX stressed the importance of proof of reserves to avoid risk and improve investor confidence, urging major crypto exchanges to publicly list their cold and hot wallet addresses. While trying to confirm funds availability on Crypto.com, cold room information revealed a suspicious transfer of 320,000 Ether (ETH) to a wallet address linked to Gate.io on October 21, 2022.

On-chain data confirms the transfer of 320,000 ETH from Crypto.com to Gate.io. Source: Etherscan

Community member @jconorgrogan raised concerns about the to transfer of 320,000 ETH from Crypto.com’s cold wallet to Gate.io, as the former claims that 100% of user-owned cryptocurrencies are kept offline in cold storage in partnership with hardware wallet provider Ledger.

As the talks escalated, Kris Marszalek, CEO of Crypto.comrevealed that the funds – representing 82% of Crypto.com’s ETH holdings in cold storage at the time of this writing – were accidentally sent to Gate.io:

“It was supposed to be a move to a new cold storage address, but was sent to a whitelisted external exchange address.”

Speaking to Cointelegraph, the Crypto.com spokesperson clarified that the whitelisted address on Gate.io belongs to Crypto.com. Regardless, Marszalek confirmed that Gate.io had returned the funds to Crypto.com cold storage and reassured investors that new processes and features had been implemented to prevent they don’t breed.

While on-chain data confirms Gate.io returned 285,000 ETH to Crypto.com, Marszalek said all funds were returned. Further investigation showed that the missing 35,000 ETH was sent to a different address, which has yet to be confirmed by the crypto exchange.

This is not the first time Crypto.com has made headlines for an accidental transfer. In August 2022, it was found that Crypto.com accidentally sent 10.5 million Australian dollars (worth over $7 million) to Melbourne-based investors, which was supposed to be a repayment of A$100 ($67). The incident happened in May 2021 but was only discovered after an annual audit in December 2021.

Related: Crypto.com Pledges to Provide Proof of Reserves After Halting FTX-Backed Solana Deposits and Withdrawals

Marszalek promised to release Crypto.com-verified proof of reserves on November 10 while emphasizing the importance of transparency and user security.

With most crypto companies willing to share their proof of reserves, investors now have the ability to confirm the existence of their funds, ultimately preventing business owners from misusing storage funds at cold.