Following FTX and BlockFi Bankruptcies, Is Next?

By Juan Fajardo Juan Fajardo has been verified by Muck Rack's editorial team
Published on December 3, 2022

Saying that it has been a difficult year for crypto would be quite an understatement. The Terra/Luna crash, Axie Infinity hack, Celsius collapse, Three Arrows Capital fiasco, and now the FTX controversy are enough to have anyone wondering about the future of crypto. With fears of contagion starting to mount up, we all are wondering what company will follow. With having been exposed to FTX, many believe that could be next.

The crypto market now sits under the $900 billion mark, something few would have predicted after a meteoric 2021 rise that saw the crypto market reach the $3 trillion mark. With crypto winter having extended way beyond what most investors predicted and the current panic spawning across the ecosystem, crypto companies are finding themselves trying to calm investors.

Low Liquidity Assets Might Be a Problem for Crypto.Com, which has been the target of criticism over the past month, has found itself doing its best to assure investors of its platform’s liquidity. Concerns around’s liquidity stem from the platform’s reliance on low liquidity assets like Shiba Inu and CRO (its own token). With only 60% of all assets being in liquid coins like BTC/ETH/USDT/USDC/DAI/BUSD, investors were quick to take action. 

Cronos (CRO),’s token, dropped in value significantly after FTX’s collapse. This took place as short CRO traders paid as much as 3% premiums to long traders, which according to UTXO Management Senior Analyst Dylan LeClair is “the exact same dynamic that occurred before Celsius and FTX collapsed.” Executive Speaks

Concerns around the future of forced Chief Executive Officer Kris Marszalek to speak publicly about the fears. Taking questions via a YouTube live stream, Marszalek assured investors that the platform had enough reserves to match every user deposit. According to Marszalek:

“Our platform is performing business as usual. People are depositing, people are withdrawing, people are trading, and there’s pretty much normal activity just at a heightened level. We never engage as a company in any irresponsible lending practices, we never took any third-party risks. We do not run a hedge fund, we do not trade customers’ assets. We always had 1-to-1 reserves.”

Analysts have been quick to point out that while might not be a hedge fund, the platform’s reliance on third parties could be an additional source of risk for investors. In fact, Marszalek said that the platform had received $990 million from FTX and its exposure was limited to $10 million.

Marszalek also announced during the stream that the company would be publishing an audited proof of reserves within weeks and that the company would continue operating as usual. However, blockchain data shows that withdrew over $260 million USDT from Binance and Circle before the announcement, which has further raised the alarms in the crypto space. Binance CEO Changpeng Zhao tweeted in this regard:

The Controversy Is Extending

While is yet to publish its proof-of-reserve audit, Binance has already started setting up a proof-of-reserves system that would allow anyone to check the company’s solvency. While well received by many investors, experts like Kraken’s CEO Jesse Powell were quick to point out the lack of information on liabilities. According to Powell, this renders the PoR pointless. has been widely criticized over the years for its reliance on expensive marketing campaigns, renaming of sports venues, and sponsorships. While these moves are certainly not an indication of future risk, they might not be enough for the company to ease concerns about its finances. The current controversy might very well represent a unique opportunity for to step up and show a different face to the platform.

With the entirety of the crypto world still waiting for the publishing of the proof of reserves, pressure is mounting on and other exchanges to become more transparent. While a short-term bankruptcy is highly unlikely for, more information and facts are needed to make a valid prediction of the platform’s future. For now, caution should be the law of crypto land.

By Juan Fajardo Juan Fajardo has been verified by Muck Rack's editorial team

Juan Fajardo is a News Desk Editor at Grit Daily. He is a software developer, tech and blockchain enthusiast, and writer, areas in which he has contributed to several projects. A jack of all trades, he was born in Bogota, Colombia but currently lives in Argentina after having traveled extensively. Always with a new interest in mind and a passion for entrepreneurship, Juan is a news desk editor at Grit Daily where it covers everything related to the startup world.

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