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Crypto exchanges have looked to cool investors’ fears of contagion today as the industry is rocked by the shockwaves of FTX’s collapse last week.
In an ‘ask-me-anything’ on Youtube, the boss of Singaporean-based exchange Crypto.com, Kris Marszalek, insisted the firm had a strong balance sheet and was not exposed to the ripples of the FTX implosion.
Marszalek was facing questions from customers over his transfer of over $400m worth of Ethereum to a secure ‘cold storage’ address, which was mistakenly sent to another exchange address.
“At no point were the funds at risk of being sent somewhere they could not be retrieved. It had nothing to do with any of the craziness from FTX,” he told the Youtube audience.
Crypto.com is among a host of firms to commit to releasing audited proof of reserves to try and bolster confidence and convince the market it is not susceptible to a run on its assets, after FTX was brought down by a rush from customers to pull their assets from the exchange.
Marszalek said the industry had been set back “a good couple of years” by the downfall of FTX and the market need to win back the faith of investors and customers.
“Trust was damaged, if not lost, and we need to focus on rebuilding trust,” he said.
His comments followed those of Binance founder Changpeng Zhao who said it was hard to shield the market from bad actors.
“No one can protect [from] a bad player, to be very frank, if a guy is very good at lying, and very good at just pretending to be what he’s not. [If] somebody wants to violate the law, the law is not going to prevent that. The law can help to reduce that,” Zhao said, in comments at the B20 summit in Bali, reported by the Guardian.
Zhao pulled out of a potential rescue deal of his main rival last week and left the firm scrambling to raise emergency funds before filing for bankruptcy on Friday.
The collapse of FTX – previously regarded as one of the most stable firms in the sector – has left firms across the industry facing existential questions as fears of a proliferating liquidity crisis spread.
Zhao announced the launch of an industry recovery fund today to help steady firms that are Illiquid from imploding in the event of a run on their assets.
To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis,” Zhao wrote on Twitter.
The FTX collapse comes after a torrid year for the industry in which more than $1tn values has been wiped from the value of the market. Bitcoin, the most valuable currency, has shed more than 70 percent of its value in the past 12 months and suffered its worst week in five months last week.
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