London November 13 2022: Crypto.com said it recovered almost $400 million in cryptoasset Ether from Asian exchange Gate.io, after it accidentally transferred the funds to the wrong account.
The company was supposed to move 320,000 in Ether to a new cold storage address -- a type of offline wallet -- but the funds were sent instead “to a whitelisted external exchange address,” Crypto.com Chief Executive Officer Kris Marszalek said on Twitter.
Crypto.com’s initial Oct. 21 transfer represented more than 80% of the exchange’s total Ether holdings, according to a partial proof of reserves provided by Marszalek on Nov. 11.
A spokesperson for the company said the Gate.io address was a corporate account that belonged to Crypto.com, and that the entirety of the Ether was “successfully withdrawn over the following days” after Gate.io increased its daily withdrawal limits.
Crypto.com’s website says all of its users’ funds are held in cold storage, while so-called hot wallet usage is solely for corporate assets. The spokesperson declined to clarify whether user funds were involved in the transfer.
The error comes after Crypto.com mistakenly sent about A$10.5 million ($7 million) to a woman in Melbourne last year, when an account number was accidentally entered into the payment field.
The cryptocurrency industry has come under intense scrutiny in recent days following the collapse of rival exchange FTX.com, prompting greater focus on firms’ internal labeling and risk management procedures. Crypto companies have sought to ease user concerns by promising to publish audits on their reserves in the coming days.
“We worked with Gate team and the funds were subsequently returned to our cold storage. New process and features were implemented to prevent this from reoccurring,” Marszalek added in his tweet.
Gate.io founder Lin Han said on Twitter that its own proof of reserves audit was based on a snapshot taken two days before Crypto.com’s accidental deposit.
Originally based in China, Gate.io later shifted its home to the Cayman Islands. It operates a separate US exchange.