Debunking FUD: The Truth About Crypto.com After FTX Collapse

hello everyone so today's video is about the fury fear uncertainty in doubt rumors created about crypto.com and

in the aftermath of the FTX exchange collapse there's a lot of speculation that's been made about crypto.com and

it's going to be the next FTX to collapse and a lot of these rumors are unfounded and I had explained it in a

few of my Twitter threads and on point by Point explaining detailing what the rumor was and what the actual fact was

today we're going to be looking at some facts and drilling into you know how much of this is true and whether there

is a concern in this crypto.com or safe exchange or not and a comparison mainly between the fall of FTX and crypto.com

so again disclaimer and warning I'm not an investment expert or a financial advice then enough the content of my

video should be taken as a financial advisor or investment expert and also another point that I always make is that

never send your money or crypto to somebody else to invest for you your money you invest because most of these

people are actually frauds and I'm active on Twitter and I'll emphasize this point at the end of this video as

well my Twitter handlers are three Channel London in fact today's video is probably made about uh three Twitter

threads that I made on crypto.com so in the Prelude to this video right so the crypto climate right now so I've made

two videos originally in Tamil and I now meet them in English as well it's about the collapse of FTX it's made in two

parts and I will give you the links to these videos as well to understand what led to the collapse of the FTX exchange

right so we saw that FTX have actually stolen the customer funds customer assets for their own benefits they've

been trading with it and now they have filed for bankruptcy leaving all the customers of FTX in a big problem right

now so um FTX was the second largest exchange and Sam bankman fried SBF was the poster

boy of crypto and you know with this corruption and fraud he's actually taken the crypto industry back by almost two

years as per unit export and this is like you know people like SBF and dokon have done so much damage to crypto right

now that you know everything that has been thrown out at other exchanges and parties are like a knee-jerk reaction

part knee-jerk reaction and part of it people are believing it because you know if these two exchanges have collapsed or

these two ecosystems have collapsed which people had relied on at one point of time you know what's stopping other

actions from collapsing and it's so easy to spread a room around some of the exchanges specifically and there is also

the industry competition as well that's another angle that needs to be taken into account so

uh what I did was I I created three different Twitter threads and I had explained and this is what I'm going to

go into detail today because people wanted a bit more easier explanation on it like a tldr version

so first of all we will not blindly defend crypto.com a lot of comments have been made about Sierra fam and just

blindly defending it I'm not going to blindly defend it let's go into a rational discussion so we need full

transparency for sure so what are the main concerns you know when I started the uh preparation of this

content there were like five four or five different uh key allegations that were being made one is a ship token

balance massive layoffs at crypto.com influences just posting withdraw without any rational ethereum sent the gate

exchange there's a cold wallet inflow explainer and then there are few more which will go into the later point of

time so first is after this FDX collapse um Chris who's the CEO of crypto.com he shared a nonsense portfolio nanson is a

online dashboard which can reflect the content of a cold wallet or an address in a online dashboard this is not a

proof of this is not a snapshot at a point in time this is an online dashboard where you can see in real time

what's the content of a particular address or a cold wallet for example so they shared this Manson portfolio in

transparency and you can see in the nansen portfolio there's 20 percent of the cold wallet of that particular cold

world which was 3 billion at the time now is what 2.5 billion because of the fall of BTC is about 20 percent is made

up of ship and this cost a lot of influence to say that why is crypto.com holding 20 in ship you know why are why

is a major exchange holding 20 percent of mean coins in their cold wallet for three billion tokens and this even some

people claim that there is an extensive analysis to find out that ship balance is about 20 percent.com as if they had

investigated and found out in reality actually if you go and click the I'll give you the nonsense dashboard link as

well even I had shared it in Twitter if you weren't actually click on it you will see this this nuclear dashboard

which already tells you that ship balance is 20 there's no need for any investigation or extensive analysis so a

lot of these blockchain new experts you know claim that they did the analysis so what's the reality why do they have 20

percent of ship in reality they are maintaining the customer assets one is to one so in episode 35 last year when

shib was Making Waves uh in fact we started talking about ship even before um you know it was being listed on

Central restrictions so a lot of people had bought ship in many of the crypto exchanges and crypto.com is basically

maintaining all of these user tokens as one is to one they do not convert if you buy ship they don't convert it for you

into usdc or usdt and store it they just store it as ship basically if you go to the bank and you you put in your safe

Locker gold or silver or Pearl or if you put in an iron bar they are going to basically their duty is to basically

store it as an iron bar their duty is not to convert your iron bar into steel or gold or whatever it is so that is

exactly what crypto.com are doing they are storing their customer deposit as is one is to one secure as you would expect

any crypto exchange too in fact this is not what FTX did and that is why they are in a problem right now right so this

is again it was Common Sense Once you understand that if the customer

deposited ship then they have to store it and ship that is why twenty percent of that cold wallet is shipped because

so many customers are holding ship in crypto.com exchange and a lot of these influencers who are attacking crypto.com

basically deleted their tweets some of them even apologized but the damage was done because you know once you know a

person with hundred thousand subscribers a hundred thousand followers if they tweet or if they say that you know there

is a a disproportionate amount of ship being held by crypto.com that's what stays you know people don't realize that

they have already deleted that ways they backtracked on the words and they have done no uh analysis whatsoever they

don't they don't realize all of this the perception damage is already done that is exactly what these influencers were

doing at that point of time with no rational whatsoever so this is the first point and this is how the the entire

thing goes basically so again massive layoffs you know ah there were lot of influences was tweeting about the fact

that you know crypto.com is or not even Factor the point that crypto.com is actually doing a massive layer of you

know fifty percent of Staff have been laid off and and Chris had to confirm that you know no staff reduction

exercise has been done after July that's the last point when we had done it and most of these influences again went back

and deleted their stories and again uh you know this these are not facts that you can hide under the blanket right if

a major exchange or a major organization is doing a staff reduction exercise it will come to it will come in the news

you know it will become very evident that they are doing it so the EU is very clear in saying that you know the last

one was done in July and we haven't done anything after that point again you know these are perception damages that people

were doing and a lot of influencers were just posting not your keys withdraw it and you know just just creating panic in

fact I have been making content over the last one and a half years from my episode 22 to 23 onwards on how you can

safely move your funds from centralized Exchange to non-custodial wallets into your own D5 wallets and why you need to

move your funds to D5 wallets and how the D5 passive income is much much better than keeping your funds in

centralization I've been advocating about moving into the uh the decentralized wallets for example so but

I have said it with rational and and there is a we will come back to this point again but the Panic that they were

creating was like blind panic you know no rational no explanation whatsoever the one allegation that had real

substance to it was the ethereum that was sent to the gate IO exchange this was the real question this happened in

October this actually was a blockchain analysis a person called Corner action did the blockchain analysis nearly about

320 000 a few Million worth of um ethereum was sent by crypto.com to a gate.io exchange address and then it was

returned back to CDC so Chris had to then come out and explain that the gate dot IO exchange address was actually a

white listed address that belonged to crypto.com so instead of sending it to one of their cold wallets they had by

mistake sent it to another white listed address that belong to CDC but that was an exchange address that they had

maintained the corporate actors that they maintained with gate.io so this was a mistake and once they realized the

mistake they returned it back from that address to CDC and then they put it back into the cold wallet this is something

like you know know if you have a bank account in HSBC and if you have bank account in icsa instead of sending it to

your HSBC account you send it to your ICICI account like for example if you go to transfer and it shows you two

earnings with the name because that's how you win the nickname if you've not given the nickname correctly or if

you're not named it correctly you know there are times where you make a mistake and you send it to one of your own

addresses or own bank accounts but to a different bank for example this is what happened this is the mistake but what

should have happened this they should have transparently admitted that we made a mistake given the the focus that we

are all in given the climate that we are in such mistake should be transparently admitted immediately after it happened

if it had been addressed in October itself people would not have been able to pinpoint it or you know make a make

it 10 times bigger than what it was for example in fact one of the stories that was spent around this fact was the fact

that you know proof of research snapshot was being taken and then they are returning the a crypto back so the

basically the same crypto is being taken as a snapshot and multiple exchanges and and it had no uh truth behind it because

you know the proof of uh reserves that crypto.com gave was basically a nonsense portfolio which is an online which is a

real-time link and gate.io on the other hand are working on Mercury proof of resource Mercury proof offices like all

Muslim industry standard uh proof officer which doesn't work on this kind of you know just transfer take a

snapshot and then transport it back so a lot of it was again without any basis behind it so one of the real questions

that again was asked was uh Adam was asking what's the rational behind the transfer route deposit route into the

cold wallets and they are only a listed specific list of addresses that are able to or that are transferring into these

coal wallets and what's the explanation behind and Crystal explained this and also in his AMA that they have a strict

policy about whitelist addresses unless an internal address is whitelisted they cannot deposit into the cold wallets or

they cannot transfer into their specific wallet and this is again for security that not any Tom Dick and Harry can

transfer or in or out into their cold water cold wallets it needs to be a whitelist address it's basically an

additional control and that kind of explain the the rational behind the mistake that was made but again it was

still a mistake at that point right so another Refugee that's been created is about the cro token itself and about how

it's an exchange tokens being compared to the ftt Token of FTX Exchange um this again Chris addressed it in his

AMA more clearly which we'll talk about later but in one reality that people are conveniently forgetting is that cro is

moving more and more from an exchange token into a blockchain token like ethereum lack of lunch the Kronos chain

has become almost a separate entity on its own uh from The crypto.com Exchange and the cro is the cro's main utility

comes from the further it's a gas piece token on the Chronos chain and a lot of the passive income earning or a lot of

people have actually moved the cro from The crypto.com Exchange to the Kronos in fact I had also tweeted when crypto.com

as an exchange was reducing the rewards that they were giving in terms of cro for their Visa cards their their income

on the exchange and the app um I was also saying that this is more sustainable because they need to move it

more and more to the Chrono sheet so again this is another thing that people had not thought about rationally in

terms of the feud created against the cro token another big point that Chris made during

his AMA was about the fact called hedging you know what is hedging or he was explaining hedging but I thought in

his Amy that was one point that wasn't made very clear to people to understand what is hedging why it's needed to be

done and what it meant for the one billion dollars that crypto.com transferred to FTX over a period of one

year so a lot of people alleged that it was actually a money being transferred for uh reward hunting for the high

interest that FTX was giving and Chris just explained that it was about hedging but it wasn't very clear so let's see

what hedging is right in episode 5 which I made both in Tamil and English I've explained about derivatives a lot of

people who had no clue about derivatives saw the simplified explanation on that video about what derivatives are and

understood very clearly what is derivatives but we will again explain it in this video in the context of what

hedging is right with the regards to crypto.com so the commonly used derivatives that people are aware aware

of are the you know longing or shorting of a an asset leverage trading commonly called Perpetual leverage trading with

like 10 x 200x Libre so um there is another uh form of derivatives which is what the exchange

is used in terms of different hedging options we even talked about hedging in that episode five in a different context

but here we will talk about hedging options like put options and future options to eliminate the market risk

this is almost like an insurance option to protect against the fall of a token price

so like we have an insurance company that protects uh goods and tangible assets we have crypto hedge funds in

fact we used to have hedge funds in finance and many of these uh traditional hedge funds have also now started

offering crypto hedge funds and these days the the concept of hedge funds actually existed much before crypto and

now they are also offering crypto hedge funds how do these hedge funds operate they are practically similar to an

insurance they take the risk for a small cost like how insurance companies take a risk for a small cost crypto exchangers

can buy these options and Futures on high value tokens from these hedge funds at an insurance Price and they they are

protected in case the price of that particular asset Falls or crashes so let's see one example for example if

Bitcoin is at twenty thousand dollars and you buy an option to sell exactly at twenty thousand dollars for a period of

one year let's say for a 200 cost in case the price crashes within that one year if the price crashes to ten

thousand dollars if you hadn't taken this this option or had you hadn't edged it you would have probably been at a

loss of you know so many dollars for example if you were held uh X number of Bitcoins but if you need liquidity and

you need to sell it at that point of time and you can't hold it anymore as an exchange then you can exercise this

option you can sell it for twenty thousand dollars because you've bought an insurance option in the form of

hedging as a option so it is a it's a like it says the name says right if you don't want to sell it that's good too

because you know if if the value is about ninety thousand dollars for the entire year if it's thirty thousand

forty thousand then you can already sell it for a profit you don't even need to access this an option so that is

basically just like an insurance you know if you if you are in an accident then you use it if you are not having an

accident then actually it's good right so that is how the comparison is so now by doing this they are protected

against the volatility of the asset for a period of time so this is this is basically how the exchanges need to

maintain liquidity and make sure that you know they need to they need to maintain a holding of Bitcoin they need

to maintain a uh you know portion of the other assets to be able to provide liquidity to the users in case they want

to buy it and these are major assets and major quantities of assets that need to buy and by hedging it they are actually

protecting against the price drop of the asset for a smaller fees and this is how ah m in the AMA Chris was saying that

they are Market neutral or this is their Market risk elimination strategy so why don't they do it themselves in typically

um you know the the crypto hedge funds are coming into picture to offer this insurance because they're completely

different business hedge funds are fundamentally derivatives trading so in reality exchanges should not trade you

know it's like mixing two different things completely right you know being being in a bank and then also using the

bank's money to do something like a risky business like mutual funds or investment or like an insurance right

that's it's kind of a risky business so derivative Trading an extremely Risky Business and crypto Hench funds

obviously operate this that's their Core Business and they are isolated financially by by having that as the the

own business so like I said you know Bank questions insurance if a bank operates both a customer uh funds Bank

under an insurance and if they take the customer funds without their knowledge without their consultant then they

operate the insurance and then they fall down you know then the customer funds are lost that's a risky business so this

is why you know if a bank actually does it um the the insurance will be a like a

third party that they've just acquired from a brand name perspective and even then there'll be extreme auditing needed

to make sure that you're not using customer funds without their knowledge right so which is another reason why

crypto.com doesn't operate a crypto H1 and you can see a list of big crypto Edge funds in this capital.com crypto

hedge funds page in fact the risk is is so high with regards to crypto hedge funds that I can't even access this page

from UK because the financial conduct Authority banned the derivative in UK for crypto

is also another thing that I explained in that episode five so I have to actually use a VPN if you want to even

access some of these pages with regards to crypto hedge funds so this is important because to purchase these

crypto hedge funds across all of these uh crypto hedge fund providers crypto.com will be sending

tokens to them or will be sending usdc to them to purchase these Insurance products or options and that is what the

one billion dollar accounted for in terms of why they were sending one billion dollar to FTX to purchase these

options for the crypto hedging perspective and why FTX because FTX is also as an exchange they were also doing

derivatives and hedging but they were having certain tokens which were only provided by FTX like nurray Solana for

example they were being only provided by FTX and so it needed to be hedged with FTX as an exchange there were that many

other crypto Edge funds like Bitcoin in ethereum there were more crypto actions but this one was specifically with FTX

and the exposure that remains with FTX is only 10 million dollars so these were not user assets these were not yield

bearing assets that were sent to FTX for high interest and that's what Chris maintained man explained in his uh in

his uh AME but it wasn't very clear in terms of you know what he meant by H1 and that's why I kind of explained it

separately so now let us look at Chris's AMA where he addressed a lot of these questions so the uh the live AMA with

crypto.com CEO Chris uh Masala happened on November 14th I'll give you the full uh 41 minute video link in the

description it's on Twitter as well so ah one thing to remember about before we go into it is that during the Luna for

or the FTX fall if you remember uh dokon or SPF they never came into a live discussion or they never came and talked

with so much of confidence in in those days in fact you know they actually went into hiding for like a few days SBF in

factors is tweeting obscure tweets right now and he's actually not making any sense they haven't made any strong

statements like these coming out and talking with confidence and that itself goes to show the confidence that they

have as an exchange right so I will not go into the full 41 minutes because he talked about a lot of factors but you

know the the key points that I felt that needed emphasis from his AMA right so the main point that he talked about was

a difference between FTX and crypto.com in terms of the size the approach the revenue and the risk and this is very

important to understand why crypto.com will not collapse like FTX so from a science perspective crypto.com has got

70 million users which are mainly retail users who are making an entry into crypto FDX on the other hand I had about

1 million users of which about 10 000 Pro trading users were really active that's their active user base right so

even obviously crypto.com wouldn't have all 70 million users acted because a lot of users would have come just for you

know know just signing up and just getting an entry and they may not be actively trading but the comparison in

size is huge it's about 70 times bigger than FTX in terms of the user base even though F takes was the second largest

exchange that was because mainly the pro trading users were using the FTX Exchange

approach so again it's just following up from the series's approaches to get people at an entry level into crypto it

is to enable people to get into crypto whereas FTX was a core derivative trading platform that is their main

business the revenue of CDC comes from what he talked about as a brokerage models right so it's just to take fees

from enabling the users to get into crypto and also the cost of covering that in in terms of hedging and hedge

funds so that they remain Market neutral from a risk perspective whatever assets that the users are buying those are

maintained one is to one apart from that to provide liquidity to those assets they are also doing a crypto hedging and

to do all this they just take a small Freeze from the users this is where 95 percent of their revenue comes from

focus.com exactly like coinbase and that is one of the reasons in my videos um you know there are only four or five

exchanges that I've talked about us personally having used and I provide the links in my description and the reason

why I say crypto.com in coinbase are like the the you know the best exchanges for new users is because the ease of use

with which ease of uh you know access to which you have uh you can get into crypto and as a new joining or a new

beginner you know how easy it is to get into crypto with those exchanges and again ftx's main Revenue came from the

high risk purposeful trading fees that they were getting from their users and they were also doing Perpetual trading

through the alamata research which we talked about in the FDX stories and risk this is a big element right that's got

several elements into it mainly crypto.com had never indulged in trading with their money or with

customer assets they never traded as an exchange they never trade they provided the option for users to trade but they

never traded themselves like FTX was doing with either with their money or with customers first of all if they are

not trading with their money they wouldn't have traded with the customer assets so there was absolutely no loan

that crypto.com had taken from anybody at any third party or they were not even lending to third parties with high risk

or high collateral or a illiquid asset for example and again you know they were not offering risks like we already

talked about they were not offering high risk products like hedge funds or anything and they were they had one

billion dollars in Revenue in the last couple of years every year and they were cash positive they had always maintained

a cash positive reserves as a company right so they never needed to take a loan or a high risk uh to to get money

from another company or to use cro as a collateral to get money and this year emphasized again and to talk about the

risk perspective right crypto.com Christmas it emphasizes this very clearly they were one of the very few

exchanges in the world that had zero exposure to the lunar debacle that was because they were probably one of the

only big exchange that never listed UST as a currency knowing how risky USD was a stable coin so when we spoke about the

Luna's fall right we talked about how USD was the most dangerous stable coin at that point of time and why we had

never talked about UST as a crypto in this Channel or luna for that matter and however every other exchange including

binance for example where listing USC and they all had an impact crypto.com was probably the only exchange that did

not list USD despite the fact that every other exchange was listing it and making money from it they stayed away from it

this is like you know they were getting if you had USD and if you put it into a Luna's ecosystem you're getting 20

interest but they stayed completely away from it and so that is showing how risk covers

they were right so and again hedging we talked about it so he he explained that how their remaining Market neutral from

a risk perspective by doing hedging this is something that wasn't clear in his interview that's why I explained it

separately before getting onto it and again there is a Twitter thread where I had shared the full details and I'll

share the links to those three Twitter threads again another big point that he made was with regards to the yield

hunting opportunities in FTX that people were alleging that that crypto.com is sending the money right so which was

made with zero evidence you know the the blockchain was showing that the money was being sent but there was Zero

evidence that was being sent for the evil hunting so when Chris explained that it was because of the crypto hedge

funds specifically because of assets like uh you know SRM Ray Solana which were practically only offered by FTX

that made a lot of sense and that is where the theory about this hunting and exposure all completely fell down and no

more allegations are being made about it once people understood it was for the hedge funds

and that was a bigger story right so So eventually Chris said that the final exposure in FTX stands at about 10

million dollars which is literally you know less than one percent compared to the revenue and compared to the cash

position so another fud that he addressed was the ethereum that being sent to a gate which

we talked about in terms of how it was being confused to proof of resource and and you know what that mistake was so

again it was it was a mistake but like we've already talked about it was a whitelisted address and should have been

transparently shared at that point itself and it would have killed the entire story at that point and finally

he also talked about cro as a token so he explained how they never used cro as a token for collateral to take loans in

fact they've never taken loans but they never used cro as a collateral for anything right and they had burned when

Kronos was being launched we had even covered it in episode 223 that they burned about 70 billion tokens in their

journey to Cronus as a blockchain token right and Chronos has got about 400 projects that are building an everyday

new projects are being built on Chronos and it's becoming a blockchain that is getting more and more adoption every day

and it's got close links to The Wider Cosmos ecosystem because it's built on the same IBC concept internet of

blockchains concept right so um once the IBC Bridge opens up it's probably going to get more adoption in

in The Wider Cosmos world as as a blockchain so apart from the fact that the cro is a is a exchange token it has

actually grown into a blockchain token which is what we talked about earlier as well and another fact that people were

making uh on the another rumor that people were spreading was withdrawals have stopped but in reality the fact was

that the withdrawals had never stopped there was an online web page called straight desk.crypto.com or you can

visit anytime and you can see whether the withdrawals are active or not 24x7 the page is kept active and it depends

on the network congestion depends on blockchain with which you will draw you know how much time is going to take you

know even before all of this we've talked about in our ethereum episodes where some of the ethereum transaction

takes like five six hours for example so it's blockchain congestion when everybody is withdrawing on one

particular blockchain but I did withdraw on crypto.com I withdrew on Chrono strain in a few other chains which were

fast and it took about 50 seconds to one minute in many of the chains as a test withdrawal that I did and it went

through seamlessly for me and these were my whitelist addresses so you know having said all this you know I my

subscribers will know that and I've been devoting to 25 episodes in the last you know from almost episode 22 till about

in episode 15 now we are at I've been spending like I mean you know providing like about 40 hours of content educating

with demos and explaining the benefits of moving to decentralized finance and how decentralized Finance is the future

and why people need to move to this entertainment so I'm completely for decentralized finance and in

non-cultural it's where you need to maintain custody of yourselves but again there needs to be a balance right so if

you need to bring new people to crypto and give them an easy entry for them so you need a simple tool like an Amazon

like tool for um for entry into crypto and that is only possible with centralized 16 years

like CDC and coinbase you know before they even understand the concept of blockchain fully and then evm and then

all of the concepts behind moving into D5 they need an entry point to crypto and that is only possible with exchanges

like CDC and coinbase in the aftermath of FDX we really need to be careful and make sure that we don't spread these

rumors and unnecessarily cause damage and um you know cost confusion with regards

to people in terms of the reputation to crypto itself you know this is the time to rebuild and this is time to stop all

this refuge and educate people and get educated I would say again you know create a Twitter account and follow

important people even if you don't follow me there are a lot of people who are tweeting good content and look at

the people who are not spreading if UD and who are busting these refugees right so

um I tweet most of the time in English and you can follow me and I made this comment in in the Tamil video that if

you are you know speaking a different language for example if you want this content to be translated in Hindi or

other region languages you can always go to translate.google.com and put it in in paste it in that page and you can see

the the English content being translated into the regional language so that you can understand it better and couple of

accounts that I had suggested for the Tamil audience were crypto and crypto and there are probably other people who

are doing it in other Regional languages sometimes it is better for the people from different parts of the world to

listen to the content in their own language because then they understand it better so again you know stay educated

and you know being educated in crypto is probably the most important thing at this point in time hopefully you found

this useful until next time thank you bye