Kris Marszalek, CEO of Crypto.com, speaking at a 2018 Bloomberg event in Hong Kong, China.
Paul Yeung | Bloomberg | Getty Images
The boss of cryptocurrency exchange Crypto.com took to YouTube Monday to reassure users of his platform after the stunning collapse of rival firm FTX sparked fears of a market contagion.
In an “AMA” (ask me anything) on YouTube, the platform’s CEO Kris Marszalek said that his company had a “tremendously strong balance sheet” and that it wasn’t engaged in the kinds of practices that led to the downfall of Sam Bankman-Fried’s FTX last week.
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“Our platform is performing business as usual,” Marszalek said in the AMA. “People are depositing, people are withdrawing, people are trading, there’s pretty much normal activity just at a heightened level.”
FTX filed for Chapter 11 bankruptcy protection on Friday after concerns over the company’s financial health resulted in a run on the exchange and a plunge in the value of its native FTT token. FTX tried to reach a deal to be acquired by Binance, the largest venue for trading digital assets, but this fell apart after Binance backed out citing reports of mishandled customer funds and alleged U.S. government investigations into FTX.
Alameda Research, FTX’s sister company, borrowed billions in customer funds from the exchange to ensure it had enough funds on hand to process withdrawals, CNBC reported Sunday. Bankman-Fried declined to comment on allegations of misappropriating customer funds but said its recent bankruptcy filing was the result of issues with a leveraged trading position.
“We never engage as a company in any irresponsible lending practices, we never took any third-party risks,” Marszalek said Monday. “We do not run a hedge fund, we do not trade customers’ assets. We always had 1-to-1 reserves,” he added.
His comments come after the revelation Sunday that Crypto.com mistakenly sent $400 million worth of the ether cryptocurrency to Gate.io, another crypto exchange, in October, a mishap that raised fears Crypto.com users’ funds may be at risk.
Crypto.com and Gate.io said they were sent by mistake and were quickly returned to Crypto.com after the error was identified. Marszalek tweeted Sunday that the firm had meant to send the funds to its “cold wallet” — meaning an offline cryptocurrency wallet — but were instead moved to a whitelisted corporate account with Gate.io. In its own statement, Gate.io said the transactions were the result of an “operation error transfer” and that all assets have since been returned to Crypto.com.
“In this particular case the whitelisted address belonged to one of our corporate accounts in a 3rd party exchange instead of our cold wallet,” he added. “We have since strengthened our process and systems to better manage these internal transfers.”
That did little to assuage investor concerns, however, with traders speculating Crypto.com may be facing liquidity issues of its own and dipping into customer funds after the FTX collapse. Marszalek pushed back on claims it was misappropriating users’ funds Monday, stating in the AMA that “we do not trade customers’ assets.”
“We will just continue with our business as usual, and we will prove all the naysayers – and there is many of these right now on Twitter in the last couple of days – we’ll prove them all wrong with our actions,” Marszalek said.
“We’ll continue operating as we have always operated to continue being a safe and secure place where everybody can access crypto.”
Analysis of public blockchain data shared with CNBC by data firm Argus shows that, from 7 p.m. ET Saturday through 6.30 a.m. ET Monday, a net $68 million in ether and $120 million in other tokens was withdrawn from Crypto.com by its users. Over that same timeframe, Crypto.com added $62 million in ether and $140 million of other digital assets to meet the withdrawals, according to Argus.
“To its credit, Crypto.com continues to have the funds to meet these withdrawals, lending further credence to its CEO’s claims that their assets are backed 1:1,” Owen Rapaport, co-founder and CEO of Argus, told CNBC via email.
Crypto.com is one of numerous exchanges that have committed to providing a breakdown of the reserves that back customer assets to reassure users after the bankruptcy of FTX.
Marszalek said he expects Crypto.com to publish an audited “proof of reserves” within the next 30 days. He said he understands users’ wish to see the audit released sooner, but that auditing firms “don’t operate on crypto speed.”
“The objective of the audit is to verify independently that every single coin on the platform is matched by our reserves,” he said.
Last week, an unaudited proof of reserves handled by blockchain analysis firm Nansen showed that Crypto.com held 20% of its assets in shiba inu, a so-called “meme token.” Asked about this Monday, Marszalek said this was just a reflection of the assets Crypto.com customers were buying.
“We store whatever our customers buy and it so happens that last year doge and shib were two extremely hot meme coins,” he said. “As long as our users are holding it, we will be holding it. We have no control over what you guys buy.”
He added that Crypto.com has never used its CRO token as collateral for any loans in its history. A source told CNBC previously that Bankman-Fried’s Alameda was borrowing from FTX and using the exchange’s FTT token to back those loans.
Marszalek admitted that Crypto.com had transferred $1 billion to FTX over a year but that this was aimed at “hedging” customers’ orders. Crypto.com “only had exposure of under $10 million when FTX shut down,” he added.
“The way the brokerage part of our business works is that, every time a customer places an order to buy or sell, we have multiple venues where we could hedge this order and we pick the most cost efficient one with [the] best liquidity, lowest cost so we can pass on these savings to our customers,” Crypto.com‘s CEO said.
“This means that we are not taking any market risk, we are always market neutral. But it also means there must be fund flows between our venue and other venues in the industry and FTX was one of them.”
Crypto.com has 70 million users globally and made revenues of $1 billion annually in both 2021 and 2022, according to Marszalek. The company made headlines in 2021 for some mega marketing deals, including the rebranding of the Staples Center sports stadium to Crypto.com Arena and a commercial featuring celebrity actor Matt Damon.
Microsoft owns lots of Nvidia graphics processing units, but it isn’t using them to develop state-of-the-art artificial intelligence models.
There are good reasons for that position, Mustafa Suleyman, the company’s CEO of AI, told CNBC’s Steve Kovach in an interview on Friday. Waiting to build models that are “three or six months behind” offers several advantages, including lower costs and the ability to concentrate on specific use cases, Suleyman said.
It’s “cheaper to give a specific answer once you’ve waited for the first three or six months for the frontier to go first. We call that off-frontier,” he said. “That’s actually our strategy, is to really play a very tight second, given the capital-intensiveness of these models.”
Suleyman made a name for himself as a co-founder of DeepMind, the AI lab that Google bought in 2014, reportedly for $400 million to $650 million. Suleyman arrived at Microsoft last year alongside other employees of the startup Inflection, where he had been CEO.
More than ever, Microsoft counts on relationships with other companies to grow.
It gets AI models from San Francisco startup OpenAI and supplemental computing power from newly public CoreWeave in New Jersey. Microsoft has repeatedly enriched Bing, Windows and other products with OpenAI’s latest systems for writing human-like language and generating images.
Microsoft’s Copilot will gain “memory” to retain key facts about people who repeatedly use the assistant, Suleyman said Friday at an event in Microsoft’s Redmond, Washington, headquarters to commemorate the company’s 50th birthday. That feature came first to OpenAI’s ChatGPT, which has 500 million weekly users.
Through ChatGPT, people can access top-flight large language models such as the o1 reasoning model that takes time before spitting out an answer. OpenAI introduced that capability in September — only weeks later did Microsoft bring a similar capability called Think Deeper to Copilot.
Microsoft occasionally releases open-source small-language models that can run on PCs. They don’t require powerful server GPUs, making them different from OpenAI’s o1.
OpenAI and Microsoft have held a tight relationship shortly after the startup launched its ChatGPT chatbot in late 2022, effectively kicking off the generative AI race. In total, Microsoft has invested $13.75 billion in the startup, but more recently, fissures in the relationship between the two companies have begun to show.
Microsoft added OpenAI to its list of competitors in July 2024, and OpenAI in January announced that it was working with rival cloud provider Oracle on the $500 billion Stargate project. That came after years of OpenAI exclusively relying on Microsoft’s Azure cloud. Despite OpenAI partnering with Oracle, Microsoft in a blog post announced that the startup had “recently made a new, large Azure commitment.”
“Look, it’s absolutely mission-critical that long-term, we are able to do AI self-sufficiently at Microsoft,” Suleyman said. “At the same time, I think about these things over five and 10 year periods. You know, until 2030 at least, we are deeply partnered with OpenAI, who have [had an] enormously successful relationship for us.
Microsoft is focused on building its own AI internally, but the company is not pushing itself to build the most cutting-edge models, Suleyman said.
“We have an incredibly strong AI team, huge amounts of compute, and it’s very important to us that, you know, maybe we don’t develop the absolute frontier, the best model in the world first,” he said. “That’s very, very expensive to do and unnecessary to cause that duplication.”
President Trump’s new tariffs on goods that the U.S. imports from over 100 countries will have an effect on consumers, former Microsoft CEO Steve Ballmer told CNBC on Friday. Investors will feel the pain, too.
Microsoft’s stock dropped almost 6% in the past two days, as the Nasdaq wrapped up its worst week in five years.
“As a Microsoft shareholder, this kind of thing is not good,” Ballmer said, in an interview with Andrew Ross Sorkin that was tied to Microsoft’s 50th anniversary celebration. “It creates opportunity to be a serious, long-term player.”
Ballmer was sandwiched in between Microsoft co-founder Bill Gates and current CEO Satya Nadella for the interview.
“I took just enough economics in college — that tariffs are actually going to bring some turmoil,” said Ballmer, who was succeeded by Nadella in 2014. Gates, Microsoft’s first CEO, convinced Ballmer to join the company in 1980.
Gates, Ballmer and Nadella attended proceedings at Microsoft’s Redmond, Washington, campus on Friday to celebrate its first half-century.
Between the tariffs and weak quarterly revenue guidance announced in January, Microsoft’s stock is on track for its fifth straight month of declines, which would be the worst stretch since 2009. But the company remains a leader in the PC operating system and productivity software markets, and its partnership with startup OpenAI has led to gains in cloud computing.
“I think that disruption is very hard on people, and so the decision to do something for which disruption was inevitable, that needs a lot of popular support, and nobody could game theorize exactly who is going to do what in response,” Ballmer said, regarding the tariffs. “So, I think citizens really like stability a lot. And I hope people — individuals who will feel this, because people are feeling it, not just the stock market, people are going to feel it.”
Ballmer, who owns the Los Angeles Clippers, is among Microsoft’s biggest fans. He said he’s the company’s largest investor. In 2014, shortly after he bought the basketball team for $2 billion, he held over 333 million shares of the stock, according to a regulatory filing.
“I’m not going to probably have 50 more years on the planet,” he said. “But whatever minutes I have, I’m gonna be a large Microsoft shareholder.” He said there’s a bright future for computing, storage and intelligence. Microsoft launched the first Azure services while Ballmer was CEO.
Earlier this week Bloomberg reported that Microsoft, which pledged to spend $80 billion on AI-enabled data center infrastructure in the current fiscal year, has stopped discussions or pushed back the opening of facilities in the U.S. and abroad.
JPMorgan Chase’s chief economist, Bruce Kasman, said in a Thursday note that the chance of a global recession will be 60% if Trump’s tariffs kick in as described. His previous estimate was 40%.
“Fifty years from now, or 25 years from now, what is the one thing you can be guaranteed of, is the world needs more compute,” Nadella said. “So I want to keep those two thoughts and then take one step at a time, and then whatever are the geopolitical or economic shifts, we’ll adjust to it.”
Gates, who along with co-founder Paul Allen, sought to build a software company rather than sell both software and hardware, said he wasn’t sure what the economic effects of the tariffs will be. Today, most of Microsoft’s revenue comes from software. It also sells Surface PCs and Xbox consoles.
“So far, it’s just on goods, but you know, will it eventually be on services? Who knows?” said Gates, who reportedly donated around $50 million to a nonprofit that supported Democratic nominee Kamala Harris’ losing campaign.
AppLovin CEO Adam Foroughi provided more clarity on the ad-tech company’s late-stage effort to acquire TikTok, calling his offer a “much stronger bid than others” on CNBC’s The Exchange Friday afternoon.
Foroughi said the company is proposing a merger between AppLovin and the entire global business of TikTok, characterizing the deal as a “partnership” where the Chinese could participate in the upside while AppLovin would run the app.
“If you pair our algorithm with the TikTok audience, the expansion on that platform for dollars spent will be through the roof,” Foroughi said.
The news comes as President Trump announced he would extend the deadline a second time for TikTok’s Chinese-owned parent company ByteDance to sell the U.S. subsidiary of TikTok to an American buyer or face an effective ban on U.S. app stores. The new deadline is now in June, which, as Foroughi described, “buys more time to put the pieces together” on AppLovin’s bid.
“The president’s a great dealmaker — we’re proposing, essentially an enhancement to the deal that they’ve been working on, but a bigger version of all the deals contemplated,” he added.
AppLovin faces a crowded field of other interested U.S. backers, including Amazon, Oracle, billionaire Frank McCourt and his Project Liberty consortium, and numerous private equity firms. Some proposals reportedly structure the deal to give a U.S. buyer 50% ownership of the company, rather than a complete acquisition. The Chinese government will still need to approve the deal, and AppLovin’s interest in purchasing TikTok in “all markets outside of China” is “preliminary,” according to an April 3 SEC filing.
Correction: A prior version of this story incorrectly characterized China’s ongoing role in TikTok should AppLovin acquire the app.