The entire market suffered due to the crash of the crypto exchange FTX and many companies in the industry felt the consequences. The general panic caused many investors to withdraw their money from the exchanges and move them to hardware wallets. Because the fear was and is too great for many investors that they could end up like FTX users and suddenly not be able to get their money if the provider got into financial problems and payouts stop.
Crypto.com rejects payment problems
One name that kept up after the FTX scandal was Crypto.com. The crypto exchange, which is currently flickering across TV screens as a sponsor of the FIFA World Cup in Qatar with its large-scale circular advertising, caused great uncertainty among investors when it came to the transfer of Ethereum (ETH) even around 400 million US. Dollars from Crypto.com joined the Gate.io trading platform. Market observers saw this prominent payment as a sign that the stock exchange may also be in trouble and that it was starting to move funds in an emergency. In addition, crypto.com had to temporarily suspend all payments to the Solana network, prompting rumors that a general payment freeze may soon be in place similar to FTX.
However, Crypto.com management dismissed these speculations. Kris Marszalek, CEO of the exchange, announced via Twitter that the company is financially healthy. Customer funds were never used for their own investments and they did not have their own investment fund. Marszalek is referring to the financial structure of FTX, from which he wanted to clearly distinguish himself. Because FTX appears to have misused customer funds to fill financial gaps.
However, the Crypto.com CEO could not really calm down with his statement. Because Sam Bankman-Fried, the former CEO of FTX, claimed shortly before his company went bankrupt that customers’ funds were safe and there was no need to worry.
Proof of Reserves Report: Bitcoin 102% Received
After the FTX and Terra (Luna) incidents, hardly anyone in the crypto industry wants to rely on their word this year. Accordingly, Marszalek announced that the company plans to provide a robust view of its crypto reserves so that customers do not need to worry about their deposits.
A corresponding report has now been published. Mazars Group, which also recently released Binance’s proof of reserves, was appointed as an independent auditor and confirmed in its release that Crypto.com was able to successfully prove its reserves. Crypto.com has 102 percent coverage of Bitcoin reserves. The reserves should also be 100 percent for tested altcoins like Ethereum.
Referring to the audit report, CEO Marszalek says: “The disclosure of audited Proof of Reserves is an important step for the entire crypto industry to increase transparency and rebuild trust…Crypto.com is working hard for the safe and legal to make available to customers. – handle cryptocurrencies around the world.” Customers also have the opportunity to check the reserves of their deposits themselves through the crypto exchange, the company said. This is to create an additional protection for users that they don’t have to worry about their money.
What is the role of the CRO token for Crypto.com?
With the Proof of Reserve, there is no doubt that crypto.com has taken an important first step in regaining investor confidence. However, not all questions have been answered yet. As with competitor Binance, critics complain that the test was conducted by a relatively unknown company internationally and that the report does not provide any certainty that Crypto.com is really as liquid as assumed.
For example, there is the question of what role the exchange’s own CRO token plays in finance. At FTX, the internal FTT signal seems to have artificially inflated the balance board. Observers are therefore demanding that the reserves be hedged in US dollars or less volatile cryptocurrencies such as Bitcoin.
Meanwhile, the Crypto.com token has been on a rapid slide. CRO/USD is currently trading 93 percent below the all-time high price since November 2021. For CRO investors, this means that many who entered at high prices are now spending almost entirely. The market capitalization of the cryptocurrency is only about 1.6 billion dollars after being in the double billion range in the bull market.
Millions of dollars in sponsorships such as the FIFA World Cup and Formula 1
So it stands to reason that Crypto.com could lose a lot of money this year. On the other hand, however, the company invests heavily in its brand awareness. The large-scale sponsorship of the 2022 FIFA World Cup is likely to have cost the company a high number of millions. Crypto.com has also acquired the naming rights to the former Staples Center in Los Angeles, where the local professional basketball and ice hockey clubs play their games, for several million dollars. Crypto.com is also active as a sponsor in Formula 1 and advertises its crypto exchange with prominent testimonials such as Hollywood star Matt Damon.
The measures mentioned are likely to have an insignificant impact on the company’s coffers. And at the time of the deals, Crypto.com hardly expected that the market would collapse after the Terra (Luna) and FTX incidents and that the value of its domestic token would mostly crumble.
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— Crypto.com (@cryptocom) December 5, 2022
CRO token could explode to $0.5
So it still needs to be proven that Crypto.com will really survive this crisis and that customers will come back to trust the exchange. Another factor is how quickly the prices come back or if they go even lower. At least for the CRO signal, it can be analyzed that there is no major upward trend yet. Despite the news about the proof of reserve, CRO/USD is currently trading almost unchanged compared to the previous week at around 0.06 dollars.
Chart analysis also shows that CRO/USD is still falling on the daily chart. The altcoin price has yet to break the declining resistance line to the upside. However, a direction decision is expected soon, as the formation will reach its end point soon. A bullish breakout could drive the price to a technical price target near $0.5.
Dash Trade 2: Buy D2T tokens in pre-sale
Meanwhile, investors still have an opportunity to buy the D2T token. The native token of the new platform is available for pre-sale for only $0.0533. However, 74 percent of the stocks have already been sold out.