Crypto.com Accidentally Sends 320K ETH to Gate.io, Gets Back Days

The fall of FTX highlighted the importance of proving reserves in avoiding risk and improving investor confidence, and prompted cryptocurrency exchanges to publicly list their hot and cold wallet addresses. When trying to confirm the availability of funds on Crypto.com, cold store information revealed a suspicious transfer of 320,000 Ether (ETH) to a wallet address linked to Gate.io on October 21, 2022.

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

Community member jconorgrogan raised concerns about moving 320,000 ETH from a Crypto.com cold wallet to Gate.io, considering the former claims that 100% of user-owned cryptocurrencies are held offline in cold storage in partnership with a provider Ledger hardware wallet.

As discussions heated up, Kris Marszalek, CEO of Crypto.com, revealed that funds – which represent 82% of Crypto.com’s ETH in cold storage at the time of writing – were mistakenly sent to Gate.io:

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

Speaking to Cointelegraph, a Crypto.com spokesperson clarified that the whitelisted address on Gate.io is owned by Crypto.com. Regardless, Marszalek confirmed that Gate.io has returned funds to Crypto.com’s cold storage and reassured investors that new processes and features have been implemented to prevent a recurrence.

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

In a series of tweets, Marsalek later explained what happened while confirming that all Crypto.com operations are operating normally.

This isn’t the first time Crypto.com has made headlines about an unintended transfer. In August 2022, it was revealed that Crypto.com mistakenly sent A$10.5 million (worth over $7 million) to investors in Melbourne, which was supposed to be a refund of A$100 ($67). The incident occurred in May 2021 but was not discovered until an annual audit in December 2021.

Related: Crypto.com is obligated to prove reserves after stopping FTX-supported deposits and withdrawals

Marsalek promised to publish Crypto.com’s audited guide to reserves on November 10 highlighting the importance of transparency and user safety.

With most cryptocurrency companies ready to share proof of reserves, investors now have an opportunity to confirm the existence of their funds, ultimately preventing business owners from abusing cold storage funds.