Crypto.com CEO Kris Marszalek says his exposure to FTX was capped at $10 million
Expect a harsh crypto winter, but Crypto.com isn’t going anywhere, CEO Kris Marszalek said during a live interview hosted on his YouTube channel.
Over the past week, Crypto.com’s CRO token has fallen nearly 45% amid fears that the Singapore-based exchange will be next to face a liquidity crunch. According to data from Nomics, the exchange’s daily volume has plummeted from last year’s highs of about $4 billion to about $284 million last October, and withdrawals are on the way back up as users and investors alike remove their funds from the platform.
In the interview, Marszalek reiterated that the exchange has a strong balance sheet and said its exposure to FTX is capped at $10 million.
“We got $990 million back from FTX,” Marszalek said, noting that interexchange cash flows are a necessary part of the business.
An audit of Crypto.com is underway, but it will take some time. Accounting firms “don’t operate at crypto speed,” he said, stressing that Crypto.com and the industry both need full transparency to move forward.
The payouts are working as expected, he reiterated. The only disruption involved GALA, SRM and Ray.
“SRM is closely related to FTX,” he said.
Marszalek said that Crypto.com’s token, CRO, was never used as collateral for loans, in contrast to the relationship between FTX and Alameda and FTX’s token, FTT.
“We will never raise funds,” he added, explaining that the business is cash flow positive.
One of Crypto.com’s more controversial moves was stadium sponsorship with eye-popping price tags. The question arises as to how effective the whole thing is as a sales funnel. Marszalek says it’s a worthwhile investment, reminding people that contracts are paid annually.
“We pay a small amount each year, which is about 10% of our sales. That’s not crazy compared to other companies,” he said. “Growing to 70 million users is not possible without investing in brand awareness.”
Some of the market’s distrust of Crypto.com may stem from the exchange’s recent $400 million mishap, in which it accidentally sent ether to an account with an exchange called Gate.io. For the second time, the company mistakenly transferred millions. In August, news broke that the exchange had sent $10.5 million to a woman in Melbourne and took seven months to notice.
Marszalek explained that all addresses for transferring these scales are whitelisted and approved. The destination address was Crypto.com’s corporate account with Gate.io, and the funds were refunded after Gate.io increased the corporate account’s daily transfer limit.
“There was no risk of the funds being lost,” Marszalek said. “The system would not allow us to send money anywhere that it cannot be claimed back.”
While some on crypto-Twitter have speculated that this was part of a plan to bolster Gate.io’s holdings before proof of reserves was released, Marszalek said that was not the case.
As for Crypto.com’s critics, Marszalek says he looks forward to proving them wrong with actions and words.
“Your allegations are unfounded,” he said.
Sign up for the Fortune Features Email list so you don’t miss our biggest features, exclusive interviews and investigations.
