Bitcoin and other cryptocurrencies remained under pressure on Monday following last week's collapse of crypto exchange FTX while rival exchanges sought to reassure jittery investors of their own stability.
Kris Marszalek, CEO of Singapore-based crypto exchange Crypto.com, refuted suggestions it could be in trouble, saying in a YouTube livestream address the platform would prove all naysayers wrong.
The 'AMA (ask-me-anything)' session came after investors took to Twitter over the weekend to question a transfer of $400 million worth of ether tokens to the Gate.io exchange on Oct. 21.
Marszalek had tweeted on Sunday to say the ether was recovered and returned to the exchange, but the Wall Street Journal reported that withdrawals at Crypto.com rose over the weekend.
An audited proof of the exchange's reserves report will be published within weeks, Marszalek said on Monday, adding that the exchange did not engage in any "irresponsible lending products".
Crypto.com is among the top 10 exchanges by turnover globally, but smaller than FTX and market leader Binance. It made headlines in 2021 by signing a $700 million deal to rename the Staples Center in Los Angeles as the Crypto.com Arena, and getting actor Matt Damon to promote the platform.
FTX filed for bankruptcy on Friday, one of the highest profile crypto blowups, after traders rushed to withdraw $6 billion from the platform in just 72 hours and rival exchange Binance abandoned a proposed rescue deal.
It was engulfed in more chaos on Saturday after saying it had detected unauthorized access and analysts said hundreds of millions of dollars of assets had been moved from the platform in "suspicious circumstances".
New FTX Chief Executive John J. Ray III said on Saturday that the company was working with law enforcement and regulators to mitigate the problem, and was making "every effort" to secure assets. Former CEO and FTX founder Sam Bankman-Fried has previously told Reuters some of the transfers out of FTX were a result of "confusing internal labelling."
Another crypto exchange Kraken said on Twitter on Sunday it had frozen the accounts of FTX, affiliated crypto trading firm Alameda Research and their executives.
"We have actively monitored recent developments with the FTX estate, are in contact with law enforcement, and have frozen Kraken account access to certain funds we suspect to be associated with 'fraud, negligence or misconduct' related to FTX," a spokesperson for Kraken said in a statement.
Bitcoin slid back below $16,000 early on Monday before recovering to trade at $16,774, up 2.8% on the day. Still, with losses so far in November at 18%, it remains set for its biggest monthly fall in percentage terms since June when the fallout from the failure of stablecoin TerraUSD roiled markets.
FTX's token was worth just $1.3, down 94% in November, while Crypto.com's Cronos token has halved in the past week to $0.06, according to price site Coingecko.
Investor nerves
FTX's collapse has left investors nervous as unverified rumours swirl, even as exchanges publish details of their reserves and promise further disclosures.
"One of the theories floating around is that the exchanges are moving crypto around to shore up their balances and make everything look good even when it's anything but," said Zennon Kapron, founder of fintech consultancy Kapronasia.
"It's like someone showing someone a bank statement that you had $100 in your account at 2pm this afternoon. At 1pm it might have been $1 and someone just transferred you $99, and at 4pm, you're going to send it back...A snapshot tells us very little about the actual health of an exchange."
Separately, smaller, Asia-baed exchange AAX halted withdrawals over the weekend citing failures at an unnamed third party partner during a scheduled-system update.
AAX said it hoped to resume regular operations for all users in 7-10 days, but in a note to customers noted that: "In light of the insolvency of one of our industry's largest players last week, crypto users are rightfully concerned about the operational and financial stability of centralized digital asset exchanges".
Changpeng Zhao, chief executive of Binance, the world's largest crypto exchange, tweeted that he would look to create an industry recovery fund to help projects that were "otherwise strong but in a liquidity crisis", adding that more details would follow.
Binance, last week, signed a non-binding letter of intent to buy FTX's non-U.S. assets but later abandoned the deal, precipitating its bankruptcy.
Zhao has since warned of a "cascading" crypto crisis.
Meanwhile regulators continued to circle FTX, which had itself been a white knight investor for failing crypto projects in the summer.
The Bahamas securities regulator and financial investigators are investigating potential misconduct over FTX's collapse, the Royal Bahamas Police Force said on Sunday.
Visa Inc, the world's largest payments processor, said on Sunday it was severing its global credit card agreements with FTX.
After the Friday crash, FTX general counsel Ryne Miller tweeted on Saturday that the exchange had "initiated precautionary steps to move all digital assets to cold storage." Cold storage refers to crypto wallets that are not connected to the internet to guard against hackers.
Miller said that the firm is "investigating abnormalities with wallet movements," but that the facts remain "unclear" and that FTX will "share more info as soon as we have it."
FTX appeared to have verified rumors of a potential hack on the exchange's Telegram channel and has asked customers to stay off the firm's website and delete FTX apps, CoinDesk reported.
The Washington Post could not confirm the details of message in the firm's private Telegram channel.
Roughly $473 million in crypto assets appear to be stolen from FTX without permission, according to Elliptic. The tokens were quickly converted to ether, the second-largest cryptocurrency, a popular technique used by hackers to prevent their funds from being seized.
"They certainly moved, we don't know whether that was with permission or not - that's not something we can determine from the blockchain alone," said Tom Robinson, co-founder of Elliptic in an email.
Sam Bankman-Fried, the co-founder and chief executive of FTX, resigned on Friday just three years after the exchange he founded had gone from being an industry giant valued at $32 billion to facing collapse.
'The Washington charmer'
Sam Bankman-Fried, the 30-year-old wunderkind of cryptocurrency, spent tens of millions of dollars over the past year trying to reshape how Washington and the world think about finance.
The crypto exchange he founded, FTX, had become an industry-dominating business in just three years, valued at $32 billion as recently as January. He amassed political clout in an even bigger hurry, emerging from obscurity to become the second-biggest Democratic donor in the midterm elections.
By Friday, the money and the clout had disappeared.
With his disheveled appearance, super-casual manner and earnest insistence that he was trying to use his money to save the world, Bankman-Fried stood apart from the stereotype of crypto brats blowing instant riches on Lamborghinis and yachts. His purported power over the crypto market drew comparisons to Wall Street financier J.P. Morgan, yet he saw himself as using his fortune for good, not greed.
How his career careened off course is a tale of ambition, hubris and ultimately recklessness - the full contours of which have yet to be publicly revealed.
When Bankman-Fried was just 28, he built a platform that offered investors easy access to buying, selling and stashing bitcoin and other cryptocurrencies. The offshore exchange allowed investors to place risky bets not allowed in the United States, though it was easy enough for American users to find workarounds; a U.S. affiliate offered limited services. With a massive marketing push - including a flashy Super Bowl ad and naming rights to the Miami Heat arena - he sought to make crypto trading a mainstream pastime.
Meanwhile, he was using his newfound political clout to sell Washington on a regulatory regime that promised to work to his advantage. The contrasts were glaring and never easily reconciled: As crypto's self-appointed ambassador to Washington, Bankman-Fried was pressing for federal regulation even as he dodged US oversight from his corporate headquarters in the Bahamas.
The executive acknowledged that FTX's aggressive lobbying made him an outlier in crypto. "Outside of us, there weren't many people engaging," Bankman-Fried said in an interview last month with The Washington Post. "I think that means we have to do a better job as an industry more generally engaging."
In March, he appeared at the House Democratic retreat in Philadelphia with his arm around House Financial Services Committee Chair Maxine Waters (D-Calif.). In April, he turned up in the office of Caroline Pham, a Republican member of the Commodity Futures Trading Commission, less than a week after she assumed the post, along with Mark Wetjen, the former acting chair of the agency and now Bankman-Fried's top Washington adviser. Hill staffers say they regularly spotted him around the Capitol, shuttling between meetings flanked by Wetjen and Eliora Katz, who joined FTX this summer from the staff of the Senate Banking Committee's top Republican, Patrick J. Toomey (Pa.)
Many crypto die-hards viewed his overtures to Washington as a betrayal of crypto's founding mission. That set the stage for his most formidable adversary - Changpeng Zhao, CEO of Binance, a rival crypto exchange - to crush him with stunning and decisive swiftness.
