5 months ago 2 min read

CZ Warns Traders and Investors; Crypto Exchanges Falsifying Proof of Reserves?


Following the FTX crash, Binance CEO CZ's decision to reveal proof of reserves has compelled other market participants to follow suit. While exchanges have begun disclosing their proof of funds, leaders in the cryptocurrency industry are making accusations about significant exchange inflows and outflows.

What's Happening at Huobi and Crypto.com?

280,000 ETH worth roughly $400 million were transferred from a crypto.com cold wallet to a Gate.io address, according to WuBlockchain's research. The Gate[.]io transfer of 285,000 ETH back to the cold wallet on crypto.com was shortly announced by the crypto twitter community. These transfers happened before crypto.com and Gate.io published their snapshot of the proof of reserves.

Source: Etherscan

In response to accusations, the CEO of Crypto.com said that these transfers were unintentional. He clarified that it was an error and that the ethereum coins were intended to be sent to a different crypto.com cold storage. By accident, the ETH tokens were sent to a Gate[.]io whitelisted address. He informed that transfer has been recovered back to crypto.com cold storage wallets.

Huobi is another exchange that is said to have conducted transfers before releasing their proof of reserves. 10,000 ETH were transferred to one of the Huobi wallets identified as Huobi 34 shortly after the proof of reserve snapshot. The wallet in question had 14,858 ETH at the time of the snapshot, but now there are only 4,044 ETH left.

Huobi has also released a statement referencing the transfer to an institutional investor mentioned above. According to the team's report, all reserves are now fully healed and functioning regularly.

What Comes Next After CZ Issues a Warning to Investors?

In light of recent claims that exchanges may be manipulating reserves, Binance CEO CZ has issued a caution to all cryptocurrency investors. He warned investors that significant money movements before or after an exchange releases proof of reserves are an obvious symptom of a problem.

According to reports, FTX's bankruptcy will have an effect on a large number of cryptocurrency projects that collaborated with FTX exchange and Alameda Research. Even Elon Musk has acknowledged that he never thought Sam Bankman-Fried, called SBF, had $3 billion to offer Elon Musk in exchange for the acquisition of Twitter.

Numerous projects, including well-known crypto ventures like Aptos Labs, Near Protocol, paxos, Genesis digital assets, etc., have received investments from SBF Exchange and Alameda. This shows that the FTX crisis is still ongoing and that many crypto companies are still having financial difficulties.

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