Not Your Keys, Not Your Coins: Exchanges Rush to Prevent FUD as Contagion Fears Mount

The community negatively views centralized exchanges due to the recent FTX saga, as Exchanges try to prevent FUD amidst fears of contagion.

It is a challenging phase for centralized exchanges as they try to reassure their users that the funds are safe with them. However, amidst the recent events, the community finds Decentralized exchanges as a safe haven.

Crypto.com, the next FTX?

Crypto.com released its Proof of Reserves that revealed the exchange holds nearly 20% of its reserves in Shiba Inu. From the on-chain data, the community discovered many unusual activities by the exchange that plummeted the price of its native token CRO. There is speculation that Crypto.com might turn out to be the next FTX. The YouTuber and crypto influencer Ben Armstrong has withdrawn all his funds from Crypto.com

Investors are taking their cryptos off exchanges

There is a fear amongst crypto investors that their preferred exchange might go down the path of FTX. Influencers are suggesting their audience withdraw from exchanges.

People are withdrawing their crypto from centralized exchanges and storing it either on software wallets like MetaMask and Trust Wallet or on their hardware wallets. The Google search for the term ‘hardware wallet’ is at a 90-day high.

Source: Google Trends

Exchanges assure users that the funds are safe.

During this challenging phase, exchanges do various activities, such as releasing Proof of Reserve (PoR), audit reports, etc., to assure transparency. Gemini has sent a letter assuring that it had no exposure to FTT tokens or Alameda. Coinsquare has sent a similar letter assuring its Canadian users that their assets and liabilities are met 1:1 and that it conducts an annual financial audit to confirm the same.

Bittrex clarified in a Twitter thread that it does not lend or lock up customers’ assets. ByBit also explained that it does not have a trading desk; the revenue comes only from the trading fees. It announced signing a contract with a reputable auditor for PoR.

OKX released a PoR dashboard that comprises mostly stablecoins, BTC, and ETH. Kraken takes a ‘Security first’ stance and explains the importance of a hardware wallet.

Phemex also commented on the situation, announcing plans to release a Merkle tree PoR by next month.

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