Crypto.com’s CEO addresses FUD on their platform, finances and token

Crypto.com’s CEO Kris Marszalek had a AMA (ask me anything) session today, November 14th, 2022, to address and kill all those unsubstantiated fears around crypto.com’s solvency, bank run, users etc.

Will crypto.com fall like FTX’s recent bankruptcy?

CDC very different from FTX: CDC is provides a service of bringing crypto to retail and get paid for that service (50 basis points). FTX is linked on a sister trading company so there is trading risks invovled.

Proof of reserve

Proof of reserve is being worked on with audit, it takes time due to the scale. Kris wants to have it faster as well, but it just takes time. It is a very positive development where exchanges are working to show their proof of assets, and push that this will be part of regulatory / law, because not every company does or practice this.

20% reserves in SHIB?

Friday CDC released cold wallet addresses, 20% in SHIB. Kris: it’s 1-to-1 reserve, and last year (2021), there was a demand of SHIB and Doge, so lots of people bought and didnt sell. It’s a reflection of client’s funds, not CDC’s funds.

Did CDC stop withdrawals?

Not true, it’s business as usual but there’s heightened levels of activities, be it withdrawals or deposits. Withdrawals are working and will always be working – this is absolutely fundamental. Go to status.crypto.com and you can see if withdrawal is working or not. 3 coins are hold for now, GALA, FTX and RAY. The ones related to FTX will be removed for now.

Influencers on Twitter are saying that CDC is in financial trouble.

These people have been around, and we’ll just do business as usual. It’s not quite right (it’s bad) baseless allegations. CDC has 1-to-1 reserves and have healthy balance sheet.

CDC have exposure to LUNA?

Zero exposure to Luna because CDC is conservative. CDC does NOT lend to third parties, which is what tends to lead to falls such as BlockFi and Celsius. No exposure to UST as well because when we looked at it, we’re concerned that it’s not sustainable and we’d rather be conservative.

$1B sent to FTX?

This was done over a year and most were recovered. FTX were our liquidity partner which coins CDC do not carry, and it’s mainly done as a brokerage. Eg when clients buy crypto on our app, we have a few buyer we can buy from, we choose the lowest cost so that we can pass the savings to the customer. (Nigel: This means we dont carry stock – very lean of doing business)

Explain hedging.

Kris: strategicly, CDC continues to grow and increase liquidity to decrease reliance on other places / third party. CDC tries to get best possible price and liquidity. CDC app and exchange

Does CDC lend funds externally and use CRO as collateral? Like FTX did with FTT token

No, this will never be done. We burnt 70% of our tokens, and we do a simple business of introducing digital assets and cryptocurrency to retail investors and CDC focus on that.

CDC has more assets than liabilities?

This is partial information, every other exchange released assets first, using Nansen, as that was fastest. Whenever you need to bring in external companies, that will take more time. 1-to-1 reserve coverage will show when the audited report comes up. Tremendously robust balance sheet: never needed to raise funds then and in future, which helps with fluctuations.

CDC supports DeFi as its “true crypto ethos”.

It’s basic human right; CDC invested a lot to build the DeFi crypto wallet. There’s more than 400 projects building on cronos ecosystem and they will continue to develop and give back to the crypto system. Will be as open-sourced and transparent as much as possible, which shows their commitment to crypto/blockchain.

How does CDC Earn program generate yields?

It’s a rewards program to reward users, and we do not consider lending yields to make it juicier. This is very important, as once it hits a certain size, we had to cut back the rewards. No one was happy about it, but CDC had to act responsibly, to have a positive cashflow business. This is how we view risk and manage platforms.

How CDC afford marketing with this revenue?

UFC, stadium renaming, world cup sponsorship. Our deals are 10 years, 20 years deal, and we pay a small portion of this long term commitment every year. This is part of our commitment to build a sustainable business. It costs us 10% of our revenue per year. It looks big when you look at a 10-20 years, but when you break it down to a yearly investment, it’s good. It wouldnt be possible for CDC to grow without investing into brand awareness, which also helps to bring awareness to this industry not just for ourselves.

What’s your expectations about future and where do you see CDC in 5 years?

Everyone has to think about how to restore trust in crypto. It will need everyone’s input – everyone has to continue to be a trusted player, fully transparent so we can provide a place that is stable and secure for CDC’s users.

If you extrapolate to 5 years, I think the industry will comeback stronger than ever though it’s painful now, from the removal of bad actors from the industry. I want everyone to understand that restoring the faith in this space will take time and effort.

Bear markets are good for one thing: really building. There is no hype, you can build stuff that clients want, you can have better market fit – these are great atmosphere for creating breakthrough products especially in the next cycle of adoption. I think its going to be fine, I remain positive for the future. If you think about the possibility, we’ve barely scraped the surface.

I want to see a social network that’d come out of this, to be able to manage 1B users. Keep the faith, stay strong. People who were here in the depth of winter in 2018, 2019 – if you want to have outcomes, you need to have commitment and conviction especially in this place.

Will you improve rewards?

We’d love to give it back, but it needs to balance the revenues from the core business. We can have better rewards when the market improves. As long as it makes sense from a sustainability perspective.

What happened with the $400M moved incorrectly?

Every single address that the system allows for transactions are whitelisted and approved, it cannot be simply sent to places where we cannot get the funds back from – no, we could because it’s was possible. At no time, the funds was at risk to be sent someplace where we cannot get it back.

We build the system such that to eliminate risks, and after such an incident, we’ve further improved the system to prevent. It happened more than 3 weeks ago – it’s got nothing to do with gate’s proof of reserves or FTX. We’re improving and fixing stuff every single day. The system wont allow us to send funds someplace we cant get back

Will we see CDC at world cup 2022?

Of course. There’s gonna be at least 5 billion people watching the game. It serves to raise of awareness, and maybe it can help tiny bit with issue of trust. I’m looking forward to it. I think it’d be a great tournament, and I hope that it’d help us relax a little and not worry about the collapse. I hope you all have a good time, and we have something in store that we will announce to you later.

Closing

Thank you community for your support, I see you backing us up on Twitter and social networks where others are throwing baseless allegations and speculate. It’s good to know this community is tight and understands how we operate. I’m thankful that the community can see how we work, I appreciate it. Remember, ignore what they say and see what they do. Compare and see what they do, see how CDC leads the way with regulations and transparency, and then make up your own mind based on what you see, especially dont just listen to baseless allegations. Our focus will remain to focus on compliance, make it safer for everyone. We all learnt a big unexpected lesson from the collapse on FTX. You can count on crypto.com to lead the way and prove the naysayers wrong, thank you all for joining.

I’m Buying The Crypto Dip (my simple reason why)

This is NOT financial advice and neither am I calling you to invest in what I’m doing – I’m showing you what I’m doing and why I’m doing it.

Also, let me also stress that there is a high chance that crypto market as a whole can go lower.

Bitcoin (BTC) and Ethereum (ETH) can go down another 20-50%.

The top 10-15 crypto projects can drop another 40-60%

ALT coins can go down another 50-80%+.

Who knows?

My simplistic basis of re-entering the crypto market is really

  1. I fundamentally believe in the technology and emerging asset class of crypto. I’m taking an asset view AND utility view for the middle to long term. So 3-5++ years of hodling, I’m good with that. 10 years or part of my legacy also is considered.
  2. Bitcoin and Ethereum has gone down at least 65-70% of their recent at the highest (ATH), and I am unable to time the crypto market at all. I dont mind buying good assets with 65%+ deep discounts, and though they may dip more the next 6 months, I will just buy more and hodl my crypto bags.
  3. I have taken some profits back to fiat (never wrong to take profits).

My goal here is that I’m not able to time the market effectively to buy at the bottomest bottom (is there even such a term) and hence zero loss. Nope, I’m not that good (though I wish, lol)

I’m happy to buy good assets with steep discounts and wait for them to zoom up during the bull cycle again.

Resource

I use https://nigelchua.com/crypto (cryptodotcom) for most of my hodling