Crypto Flipsider News – Crypto.com CRO Plummets; Calls For Self-Custody; Binance Recovery Fund; FTX Siphons Funds; SEC Didn’t Help FTX By DailyCoin

Read in the Digest:

• Crypto.com Cronos (CRO) plummets 28% amidst proof-of-reserve concerns

• investors advocate self-custody, drive exchange outflows to historic highs

• Binance creates an industry recovery fund to help struggling projects

• FTX siphons $2 billion users’ funds, faces criminal investigation in Bahamas

• Reports debunk rumours of FTX receiving help from SEC on legal loophole

Crypto.com Cronos (CRO) Plummets 28% Amidst Proof-of-Reserve Concerns

The implosion of FTX increased calls for transparency among crypto exchanges. Joining other crypto exchanges, Crypto.com issued a proof-of-reserve showing the assets the centralized exchange holds.

As per the report, Crypto.com wallets and six Bitcoin wallets hold a total of $2.68 billion in digital assets. However, the exchange has faced heavy scrutiny from the crypto community.

Following reports from analytics provider ‘Lookonchain,’ that 40% of Crypto.com’s assets are low liquidity, that there was a transfer of over $1 billion to FTX, and that its balances are made up of $531 million SHIB and $80 million in its own CRO token, the native token has taken a nosedive.

The speculations and sell-off ensuing from the reports have sent the price of CRO tumbling by more than 28%. The decline on Sunday, November 13th, saw CRO hit $0.05806, its lowest price since February 2021.

Flipsider:

• Crypto.com’s CEO Kris Marszalek in an Ask-Me-Anything session on YouTube clarified all concerns of users, saying the exchange has a strong balance sheet.

Why You Should Care

Following Marszalek’s AMA, CRO is making a comeback, gaining more than 11% in the last 24 hours to trade as high as $0.07228.

The 24-hour price chart for Crypto.com Cronos (CRO). Source: CoinMarketCap

Bitcoin Investors Advocate Self-Custody, Drive Exchange Outflows to Historic Highs

The collapse of FTX, one of the biggest crypto exchanges, has heightened uncertainty in the crypto community, with investors now calling for self-custody.

Backing the calls, Binance CEO Changpeng Zhao has said that self-custody is a “fundamental human right,” while Michael Saylor said that self-custody is necessary to prevent powerful actors from accumulating and abusing power.

The increasing calls for self-custody have driven crypto exchange outflows to historic highs. According to data from Glassnode, Bitcoin withdrawals to self-custody hit 106k $BTC/month, a historic rate only experienced three other times.

Similarly, onchain data tracker Nansen has reported that $3.7 billion worth of Ethereum-based stablecoins has been withdrawn from exchanges in the past week. FTX stablecoin balances have fallen to $38.7 million, while FTX US is at $38.3 million.

Flipsider:

• Onchain data shows that the exchange outflow is also accompanied by an aggressive BTC accumulation from all categories of investors.

Why You Should Care

The spike in Bitcoin exchange outflow is a sign of weakening investor confidence in centralized crypto exchanges.

Binance Creates an Industry Recovery Fund to Help Struggling Projects

Changpeng Zhao, the founder and CEO of Binance, the world’s largest cryptocurrency exchange, has announced the launch of an industry recovery fund to help rebuild the crypto industry.

According to CZ, the fund will help reduce the cascading negative effects of FTX’s implosion. He, however, clarified that the fund is for potentially strong projects “in a liquidity crisis.”

Although Zhao did not provide all the information on which projects would qualify, he has asked projects that feel they meet the criteria to contact Binance Labs, the exchange’s venture capital arm.

The initiative has been welcomed by the crypto community, with Tron founder Justin Sun announcing that Tron, Huobi Global and Poloniex would participate. The initiative comes only a month after Binance Pool (NASDAQ:) said it will commit $500 million to struggling bitcoin miners.

Flipsider:

• The Binance boss has clarified that FTX will not benefit from the fund, as “liars or fraud” would never qualify.

Why You Should Care

Changpeng Zhao is launching the fund to rebuild because he believes that “crypto is not going away. We are still here.”

FTX Siphons $2 Billion Users’ Funds, Faces Criminal Investigation in Bahamas

The mistrust surrounding FTX continues to build as reports emerge showing that between $1 billion to $2 billion of customer funds have vanished from the exchange, despite its assets being frozen by the Bahamas financial regulator.

The exchange is reportedly using a backdoor in the Bahamas to move funds, after halting FTX liquidations everywhere else in the world. Individuals are reportedly bypassing the internal balance transfers block by selling NFTs on FTX’s NFT marketplace.

Onchain data shows that an NFT, which traded at $9 three weeks ago, sold for $10 million. Argus, a blockchain analytics company, has reported an unusually high NFT activity at a macro level on FTX.

The Wall Street Journal has reported that Sam Bankman-Fried, now the ex-CEO of FTX, transferred as much as $10 billion of customer funds from his beleaguered crypto exchange to his digital asset trading house, Alameda Research.

Flipsider:

• The former FTX chief wrote that he “disagreed with the characterization” and didn’t secretly transfer the $10 billion as they had “confusing internal labelling and misread it.”

Why You Should Care

The reports could intensify the investigation by the Royal Bahamas Police Force on criminal misconduct by FTX and Sam Bankman-Fried.

Reports Debunk Rumours of FTX Receiving Help from SEC on Legal Loophole

The implosion of FTX has been trailed by a lot of reactions, including reports that the U.S. Securities and Exchange Commission (SEC) met with Sam Bankman-Fried several times over the last several months to provide help on legal loopholes.

The reports of the SEC boss, Gary Gensler, providing a no-action letter to FTX have been debunked by Fox Business’ Charles Gasparino. He explained that Gensler had ordered Bankman-Fried to provide more disclosure to the SEC.

According to Gasparino, the “March meeting between the two sides was described by a person attending as a ‘45-minute lecture by Gensler’ on what he wants from a crypto exchange.”

Although Gasparino affirms that meetings between both parties continued until the exchange’s implosion, no SEC approval was granted.

“He wanted strict oversight, standards and there was no guarantee of approval.”

Flipsider:

• Congressman Tom Emmer said his office will look into reports that “allege he was helping SBF and FTX work on legal loopholes to obtain a regulatory monopoly.”

Why You Should Care

If Gasparino’s reports are correct, then the collapse of FTX could be the catalyst for more stringent crypto regulations.

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