Crypto.com 'Mistakenly' Sends $400M Worth Ether to Wrong Address, Retrieves Later

Crypto.com "accidentally" sent around 320,000 Ether (ETH), which represents almost 80% of ETH on its platform, to another exchange, Gate.io. It recovered the funds later.

In late October, a substantial amount of ETH (worth approximately $400 million) was sent from Crypto.com to Gate.io. However, these tokens were actually supposed to go to a cold storage but "mistakenly" ended up in Gate.io, crypto.com CEO Kris Marszalek noted.

Following the unprecedented collapse of FTX, all major cryptocurrency brokers revealed their cold storage addresses, where they keep most of their customers' tokens in the spirit of transparency.

Marszalek posted the cold wallet addresses for some of the top assets on Crypto.com last week. Soon after, users were quick to spot a suspicious transfer of 320,000 Ether. One user, Conor Grogan, pointed out the $400 million transaction between Gate.io and Marszalek's firm on October 21st.

On Sunday, Marszalek confirmed that Crypto.com received the funds from Gate.io after the latter realized that it was the result of an "operational error."

"This large-amount entry triggered the security audit mechanism of the Gate.io platform, which was intercepted by the risk control system. After communicating with Crypto.com and confirming that it was an operation error transfer, we immediately started the asset return process and assisted in returning all the wrongly transferred assets," Gate.io said in a statement issued on Sunday.

A similar mistake was made by Crypto.com, reported in August, when the firm sent $10.5 million to two Melbourne-based women in May 2021 instead of processing a $100 refund.

Marszalek said that Crypto.com's custody systems only approve fund movement between approved and whitelisted addresses attached to the firm's cold wallets, hot wallets and corporate accounts at 3rd party exchanges.

"In this particular case the whitelisted address belonged to one of our corporate accounts in a 3rd party exchange instead of our cold wallet," he said.

However, the event has caused a massive number of withdrawals taking place from the platform and users are now worried if Crypto.com will suffer the same consequences as the now-disgraced exchange FTX.