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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.

Binance, Crypto.com CEOs race to reassure customers funds are safe

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.

– CNBC’s Kate Rooney and Paige Tortorelli

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Dogecoin surges 20% after Trump announces a Department of Government Efficiency — DOGE

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Dogecoin surges 20% after Trump announces a Department of Government Efficiency — DOGE

Chesnot | Getty Images

Dogecoin shot higher on Tuesday night, extending its postelection surge after President-elect Donald Trump formally announced the creation of the Department of Government Efficiency, which he referred to as “DOGE” in his statement.

Tesla CEO Elon Musk and Vivek Ramaswamy, former Republican presidential candidate and Strive Asset Management co-founder, will lead the department, Trump said in a statement. Together, they “will pave the way for my Administration to dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies.”

Dogecoin was last up nearly 20%. It has been one of the biggest winners in the postelection rally, gaining 153% since election day compared to bitcoin’s 30% rise in the same period. It also shot past XRP this week to become the sixth largest cryptocurrency by market cap.

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Dogecoin jumped after President-elect Donald Trump announced the creation of the Department of Government Efficiency, or “DOGE.”

Memecoins are seen as a gauge of retail interest and risk appetite in crypto. When memecoin activity ramps up, it usually indicates that retail investors are participating and have an appetite to speculate further out on the risk curve.

Trump initially floated the idea of an efficiency commission in September. Since then, Musk — who has called himself the “Dogefather” in the past and has been known to make public comments about the memecoin that influence its price — has posted on his social media platform X, referring to the commission as the “Department of Government Efficiency” or “D.O.G.E.”

Dogecoin gained relevance in 2021 following Musk’s endorsement and continuous hype on social media, which has since become a big catalyst for the coin. In May that year, Musk’s posts fueled dogecoin’s rally to its all-time high of 67 cents, per Coin Metrics. Though his appearance at the time on SNL, in which he called dogecoin “a hustle,” sent its price crashing down.

The rest of the crypto market was on pause from its postelection rally. Bitcoin was trading flat at about $87,000, after briefly touching $90,000 in late afternoon trading. Crypto stocks Coinbase and MicroStrategy were lower by 1% and 2%, respectively, in extended trading.

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Trump says Musk and Ramaswamy will lead government efficiency group

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Trump says Musk and Ramaswamy will lead government efficiency group

Elon Musk embraces Donald Trump during a campaign rally in Butler, Pennsylvania on Oct. 5, 2024.

Anna Moneymaker | Getty Images

President-elect Donald Trump said Tuesday that Elon Musk and former Republican presidential hopeful Vivek Ramaswamy will lead an efficiency group when his second term begins in January.

Trump wrote in a post that the Department of Government Efficiency, or DOGE, will “become, potentially, ‘The Manhattan Project’ of our time.” He also said the group would, “pave the way” for his next administration to “dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies.”

Trump didn’t specify where cuts will take place or when the department may be formed. Congress hasn’t created or funded such an office. He said the group’s “work will conclude no later than July 4, 2026.”

Musk’s involvement in the envisioned group was previously promised by Trump and touted by the Tesla CEO, who spent an estimated $200 million backing the Republican nominee’s 2024 campaign, as a reason to put the former president back in the White House. Musk, who also runs defense contractor SpaceX, has reportedly been stationed at Trump’s Mar-a-Lago resort in Florida since Election Night.

Ramaswamy, who challenged Trump in the Republican primary, is co-founder of investment firm Strive Asset Management. He has opposed the widespread adoption of environmental, social and governance, or ESG, principles by companies.

Trump announced a number of other appointments Tuesday, including naming Fox News host Pete Hegseth as his pick for defense secretary and John Ratcliffe as CIA director.

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Spotify shares pop on better-than-expected profit forecast

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Spotify shares pop on better-than-expected profit forecast

The Spotify logo is displayed on a screen on the floor of the New York Stock Exchange on Dec. 4, 2023.

Brendan Mcdermid | Reuters

Spotify shares rose in extended trading Tuesday after the Swedish music streaming company issued a profit forecast for the fourth quarter that topped estimates.

Here’s how the company did, compared with what analysts expected:

  • Earnings per share: 1.45 euros vs. 1.72 euros expected by LSEG
  • Revenue: 3.99 billion euros vs. 4.02 billion euros expected by LSEG
  • Monthly active users (MAUs): 640 million vs. 639 million expected by StreetAccount

While the company’s earnings and revenue for the third quarter trailed estimates, investors focused instead on guidance for the current period.

Spotify said operating income in the fourth quarter will come in at 481 million euros, exceeding the average analyst estimate of 432.7 million euros, according to StreetAccount. MAUs will increase to 665 million, while analysts were expecting 659.3 million, based on a StreetAccount estimate.

Still, revenue guidance trailed estimates. The company said sales will reach 4.1 billion euros, below the average analyst estimate of 4.26 billion euros, according to LSEG.

Subscribers to Spotify Premium, the company’s ad-free membership service that allows users to select songs on an unlimited basis, increased 12% year over year to 252 million, slightly ahead of estimates.

Spotify shares rose about 8% after the report to $452.35 after rising 2.2% in regular trading. The stock has more than doubled in value this year.

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Spotify is the platform for artists who want to break globally, says Evercore ISI's Mark Mahaney

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