Kris Marszalek, the CEO of Crypto.com, recently shared his thoughts on the collapse of Sam Bankman-Fried’s FTX empire.
Marszalek’s comments after FTX Co-Founder Sam Bankman-Fried (akam “SBF”) had tweeted about FTX’s liquidity crisis, which had forced him to ask Binance for help:
Several hours later, the Crypto.com CEO commented on the unfortunate collapse of FTX and what it means for the crypto industry:
“A sad day for the industry. This once again confirms that building with compliance and security as our foundational pillars is the right long term call. We have never engaged in irresponsible lending (no risk of bad debt losses). We never operated a hedge fund (no risk of trading losses).
“Our business is very simple: provide access to cryptocurrency and take a fee for it. Our direct exposure to FTX meltdown is immaterial: less than $10m in our own capital deposited there for customers’ trade execution. That’s very little compared to our global revenues surpassing US$1 billion for two consecutive years.
“So what does the crypto community do now? We must collectively work twice as hard to rebuild the trust lost today. http://Crypto.com will do its part as the 3rd largest crypto platform globally with 70m users. We have always maintained 1:1 reserves and believe that doing so is the most basic operating principle.
“We will push for increased transparency & regulation of the industry to ensure this is the standard by which all crypto platforms operate. Consumers deserve nothing less. As the industry’s most regulated platform measured by licenses, registrations and security certifications, we recognise the importance of transparency and will continue to engage regulators to strengthen and safeguard our industry so that what has happened today is not repeated. Global adoption of cryptocurrency depends on it.“
Another CEO to comment on the FTX debacle was Brian Armstrong, who said on Twitter:
“Coinbase doesn’t have any material exposure to FTX or FTT (and no exposure to Alameda)… This event appears to be the result of risky business practices, including conflicts of interest between deeply intertwined entities, and mis-use of customer funds (lending user assets)… we don’t engage in this type of risky activity…
“We don’t do anything with our customers’ funds unless directed to by the customer. We hold all asset dollar for dollar, and users can withdraw their money at any time… We are incorporated in the US, and publicly listed in the US because we believe that transparency and trust are so important. Every investor and customer can see our public audited financials, which shows how we hold customer funds. We’ve never issued an exchange token.“
On 10 November 2022, the Ctypto.com CEO announced that his firm had started the process of getting an audited Proof of Reserves (PoR):
According to Coin Metrics Co-Founder Nic Carter, currently (as of 8:00 a.m. UTC on 13 November 2022), these are the only crypto exchanges that have so far provided PoR reports: