Crypto.com’s Cronos (CRO) crypto token surged by over 11% on Monday as the crypto market reacted positively to Changpeng Zhao’s (CZ) decision to create an “Industry Recovery Fund” amid the current FTX exchange bankrupts. Due to the current situation faced by FTX and other exchanges, Crypto.com has been accused of not having the necessary reserves to back users’ deposits.
Crypto.com’s Cronos (CRO) Jumps 11% on Monday
Investors seem to be bullish, at least in the short term, about Crypto.com’s Cronos digital currency, which is now being traded at close to $0.068 per coin, according to data shared by CoinGecko. This recovery comes after a very hard week for CRO and the whole crypto market.
CRO lost close to 50% of its value in the last week alone after the collapse of the FTX cryptocurrency exchange. Due to this reason, a large number of crypto exchanges published their “proof of reserves,” and Crypto.com did so as well. Nevertheless, a large number of crypto users realized that there were some curious transfers that took place between Crypto.com and Gate.io.
According to @gate_io proof of reserve audit, they are 104.5% collateralized.
If the 320,000 ETH ($400M) sent erroneously from crypto .com is counted here, then their ETH on hand needs to be more than $10B or else they are insolvent and have a hole.https://t.co/25yJJmpWVF pic.twitter.com/j9cQY4OamC
— Shegen – overthrow the banks (@shegenerates) November 13, 2022
This has created additional pressure on CRO, which has also moved lower in recent days. Indeed, traders paid close to a 3% premium to short this digital currency in futures markets. Therefore, there is a strong bearish pressure on CRO and other virtual currencies as well. It seems that the golden period for exchange currencies (digital assets created by crypto exchanges) seems to have reached an end; at least in the short term.
BREAKING: A potential bank run on https://t.co/SCDLOM8zTW may be in progress.
Nearly 90,000 unique transactions have been processed in the last few hours, suggesting that users are scrambling to get their funds off the exchange 👇#CryptoCom pic.twitter.com/5XRELFgmyC
— The Chainsaw (@chainsawdotcom) November 14, 2022
It is worth pointing out that Crypto.com is also holding 58 trillion Shiba Inu (SHIB) tokens, which is considered a meme digital currency like Dogecoin (DOGE). Indeed, Crypto.com’s SHIB holdings surpass Ethereum (ETH) holdings and are valued at 20% of the total assets that the exchange declared to hold.
Moreover, 40% of its assets are considered to be “low liquidity” assets. This is also one of the things that worry investors and CRO holders. Hence, it will be very important for investors to follow what could happen with CRO in the crypto market, considering that this was one of the largest crypto exchanges in the world.
Changpeng Zhao, the CEO of Binance, proposed earlier on Monday to start a new industry recovery fund. This could help other exchanges in need and avoid a similar situation to what happened with FTX. It is not clear how Changpeng Zhao wants to implement that or which could be the participants in this fund. Nevertheless, this is a good start in order to avoid future problems with liquidity at different crypto exchanges.
On that matter, Changpeng Zhao wrote:
“To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong but in a liquidity crisis. More details to come soon. In the meantime, please contact Binance Labs if you think you qualify.”
This might be one of the most interesting initiatives in the crypto industry of the last few years.