Are Crypto Exchanges Faking Proof Of Reserves? CZ Warns Investors

In the light of FTX crash, Binance CEO CZs initiative to disclose proof of reserves has forced other market players to do the same. While, exchanges have started declaring their proof of funds, crypto leaders are raising allegations over large exchange inflows and outflows.

What’s Going On At Crypto.com And Huobi?

As reported by WuBlockchain, 280,000 ETH worth nearly $400 million were transferred from a crypto.com cold wallet to an Gate.io address. The crypto twitter community soon spotted a 285,000 ETH transfer back to crypto.com cold wallet. These transfers took place before crypto.com and gate.io released their proof of reserves.

Crypto.com CEO responded to allegations and said that these transfers were accidental. He said it was a mistake and ETH was planned to be transferred to another crypto.com cold storage. The ETH was by mistake transferred to a whitelisted address at Gate[.]io. He informed that transfer has been recovered back to crypto.com cold storage wallets.

Another exchange reportedly involved in transfers before releasing their proof of reserves is Huobi. One of the Huobi wallets labelled as Huobi 34 transferred 10,000 ETH just after the proof of reserve snapshot. At the time of snapshot the mentioned wallet had 14,858 ETH while now there are only 4,044 ETH remaining.

Huobi has also come out with a statement citing the above transfer to an institutional investor. The team has reported that all reserves are now recovered and operating normally.

CZ Issues Warning For Investors, What’s Next?

Binance CEO CZ has released a warning for all crypto investors amid ongoing allegations of possible manipulation of reserves by exchanges. He informed investors that large movements of funds before or after release of proof of reserves by any exchange is a clear sign of problem.

As reported by CoinGape, FTX bankruptcy will impact many more crypto projects which were involved with FTX exchange and alameda research. Even Elon Musk has confirmed that he never believed Sam Bankman-Fried aka SBF had $3 billion that he was offering to Elon Musk for twitter acquisition.

SBF exchange and Alameda have invested in dozen of project that includes famous crypto projects like Aptos Labs, Near Protocol, paxos, Genesis digital assets etc. This makes it clear that FTX crisis is not over yet and many crypto firms are struggling to maintain their finances at the moment.

Sunil is a serial entrepreneur and has been working in blockchain and cryptocurrency space for 2 years now. Previously he co-founded Govt. of India supported startup InThinks and is currently Chief Editor at Coingape and CEO at SquadX, a fintech startup. He has published more than 100 articles on cryptocurrency and blockchain and has assisted a number of ICO’s in their success. He has co-designed blockchain development industrial training and has hosted many interviews in past. Follow him on Twitter at @sharmasunil8114 and reach out to him at sunil (at) coingape.com

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