Riding The Wave News Summary 94
Crypto.com accidentally sends 320k ETH to Gate.io, recovers funds days after, Exclusive: At least $1 billion of client funds missing at FTX, & more.
Welcome to Riding The Wave. If you have questions or feedback, please reply to this email. If you are new to the Newsletter, please check out what we provide on our about page and consider subscribing. Within the Newsletter, I provide News Summaries, Weekly Status Updates, & Deep Dive Articles on Specific Topics (Ex: How do I pick which coins/tokens to buy?). More details here
News
Table of Contents
Tweets
Crypto.com accidentally sends 320k ETH to Gate.io, recovers funds days after
Exclusive: At least $1 billion of client funds missing at FTX
Solana Leads Crypto Slump With FTX’s Serum Project In Distress
'FTX Has Been Hacked': Crypto Disaster Worsens as Exchange Sees Mysterious Outflows Exceeding $600M
Tweets
Crypto.com accidentally sends 320k ETH to Gate.io, recovers funds days after
The fall of FTX highlighted the importance of proof of reserves in averting risks and improving investor confidence, urging leading crypto exchanges to publicly list down their cold and hot wallet addresses. When trying to confirm the availability of funds on Crypto.com, cold store information revealed a suspicious transfer of 320,000 Ether to a wallet address linked to Gate.io on Oct. 21, 2022.
Community member jconorgrogan raised concerns about the transfer of 320,000 ETH from Crypto.com’s cold wallet to Gate.io, considering that the former claims that 100% of user-owned cryptocurrencies are held offline in cold storage in partnership with hardware wallet provider Ledger.
As discussions picked up steam, Kris Marszalek, the CEO of Crypto.com, revealed that the funds — representing 82% of Crypto.com’s ETH holding in the cold storage at the time of writing — were sent accidentally to Gate.io
It’s not the first time Crypto.com made headlines for an accidental transfer. Back in August 2022, it was found that Crypto.com accidentally sent AUD $10.5 million (worth over $7 million) to Melbourne-based investors, which was supposed to be an AUD $100 ($67) refund. The incident occurred back in May 2021 but was not discovered until an annual audit in December 2021.
Exclusive: At least $1 billion of client funds missing at FTX
At least $1 billion of customer funds have vanished from collapsed crypto exchange FTX, according to two people familiar with the matter.
The exchange's founder Sam Bankman-Fried secretly transferred $10 billion of customer funds from FTX to Bankman-Fried's trading company Alameda Research, the people told Reuters.
A large portion of that total has since disappeared, they said. One source put the missing amount at about $1.7 billion. The other said the gap was between $1 billion and $2 billion.
Bankman-Fried showed several spreadsheets to the heads of the company's regulatory and legal teams that revealed FTX had moved around $10 billion in client funds from FTX to Alameda, the two people said. The spreadsheets displayed how much money FTX loaned to Alameda and what it was used for, they said.
The documents showed that between $1 billion and $2 billion of these funds were not accounted for among Alameda's assets, the sources said. The spreadsheets did not indicate where this money was moved, and the sources said they don't know what became of it.
In a subsequent examination, FTX legal and finance teams also learned that Bankman-Fried implemented what the two people described as a "backdoor" in FTX's book-keeping system, which was built using bespoke software.
They said the "backdoor" allowed Bankman-Fried to execute commands that could alter the company's financial records without alerting other people, including external auditors. This set-up meant that the movement of the $10 billion in funds to Alameda did not trigger internal compliance or accounting red flags at FTX, they said.
In his text message to Reuters, Bankman-Fried denied implementing a "backdoor".
Solana Leads Crypto Slump With FTX’s Serum Project In Distress
Keep reading with a 7-day free trial
Subscribe to Riding The Wave to keep reading this post and get 7 days of free access to the full post archives.