Crypto.com native token plummets as FTX collapse fuels contagion fears
© Kirby Lee — USA TODAY Sports
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By Ambar Warrick
Investing.com— Cronos, the native token of Crypto.com tumbled to a 22-month low on Monday amid growing scrutiny toward centralized exchanges after the collapse of major player FTX earlier this month.
CRO/USD slumped 28% to $0.0557, halving in value over the past week as investors feared a potential liquidity crunch similar to that seen in FTX.
Concerns over the exchange’s financial position escalated over the weekend after on-chain data showed it had accidentally sent about 82% of its Ethereum reserves — roughly $400 million — to a wallet linked to Gate.io in October.
While the funds were recovered, traders said the transfer contradicted Crypto.com’s claims that all user funds are held offline in cold wallets.
The exchange, which also recently disclosed its crypto reserves, drew ire for having over 20% of its reserves in the memecoin Shiba Inu.
The revelations came just shortly after the collapse of FTX, which was accused of misappropriating customer funds and being unable to meet withdrawals. Sentiment towards centralized operators such as Crypto.com was severely dented by the collapse, with several industry participants calling on traders to move their funds off centralized exchanges.
Binance CEO Changpeng Zhao also took a jab at Crypto.com, warning users to “stay away.”
While Crypto.com CEO Kris Marszalek assured traders that their funds were secure, a growing number of social media influencers advised users to withdraw their funds from the platform.
Losses in CRO vastly outpaced declines in the broader crypto market in the past 24 hours. Bitcoin, the world’s largest cryptocurrency, sank 4% and hovered around two-year lows, while Ethereum lost 6%.
Tokens of other centralized exchanges also fell. Binance’s token fell nearly 5%, while OKEx’s native token lost 6%.
Crypto markets were in freefall over the past week after FTX, the third-largest exchange in the space, declared bankruptcy and suspended customer withdrawals. Focus now turns to other entities exposed to the exchange, with lender BlockFi recently also suspending withdrawals due to exposure to the beleaguered exchange.
