As Withdrawals Increase, CEO Downplays FTX Contagion Fears and Asserts He Will Disprove His Critics

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Last Updated on November 14, 2022 by Bitfinsider

On Monday, the CEO of cryptocurrency exchange came to YouTube to reassure customers of his site following the collapse of competitor exchange FTX, which triggered fears of market contagion.

In a “AMA” (ask me anything) on YouTube, the CEO of the platform, Kris Marszalek, stated that his firm had a “tremendously healthy financial sheet” and that it did not engage in the tactics that led to Sam Bankman-demise Fried’s FTX’s last week.

“Our platform is operating normally,” Marszalek said in an AMA. “Deposits are being made, withdrawals are being made, and trading is occurring at a usual level, albeit at a heightened level.”

On Friday, FTX filed for Chapter 11 bankruptcy protection following a run on the market and a precipitous decline in the value of its native FTT token due to concerns about the company’s financial stability. Binance, the largest trading platform for digital assets, backed out of a plan to purchase FTX, citing claims of mismanaged user cash and purported U.S. government investigations.

Bitfinsider reported on Sunday that Alameda Research, FTX’s sibling company, borrowed billions in customer funds from the exchange in order to process withdrawals. Bankman-Fried declined to comment on charges of misappropriation of customer funds, but explained that their recent bankruptcy filing was due to problems with a leveraged trading position.

Marszalek stated on Monday, “As a company, we have never engaged in risky lending methods, nor have we ever taken any third-party risks.” “We do not operate a hedge fund, nor do we trade client assets. We always maintained a one-to-one reserve,” he continued.

Sunday’s disclosure that transmitted $400 million worth of the ether cryptocurrency to another crypto exchange,, in October, sparked fears that users’ cash may be in jeopardy.

Both and said they were sent in accident and were promptly returned to once the error was discovered. Marszalek tweeted on Sunday that the company had intended to send the monies to its “cold wallet” – an offline bitcoin wallet — but instead they were transferred to a corporate account with that had been whitelisted. In its own statement, explained that the transactions were the result of a “transfer operation error” and that has since received all assets.

“In this instance, the whitelisted address belonged to one of our corporate accounts on a third-party exchange as opposed to our cold wallet,” he continued. We have since upgraded our processes and systems in order to manage these internal transfers more effectively.

However, this did little to relieve investor concerns, with traders speculating may be having its own liquidity troubles and dipping into customer cash following the FTX collapse. Monday, Marszalek responded to allegations that it misappropriated consumers’ monies by declaring in an AMA that “we do not exchange customers’ assets.”

Marszalek stated, “We will continue doing business as usual, and we will show all the skeptics — and there are many of them on Twitter right now – wrong with our actions.”

“We will continue to operate as we have always done so that everyone has access to crypto in a safe and secure environment.”

Analysis of public blockchain data given by analytics firm Argus reveals that, from 7 p.m. ET Saturday to 6:30 a.m. ET Monday, customers withdrew a net of $68 million in ether and $120 million in other tokens. During the same period, reportedly acquired $62 million in ether and $140 million in other digital assets to cover withdrawals.

Owen Rapaport, co-founder and CEO of Argus, stated “To its credit, continues to have the cash to make these withdrawals, providing further credence to its CEO’s claims that its assets are backed 1:1.”

After the bankruptcy of FTX, a number of exchanges, including, have pledged to provide a breakdown of the reserves that back customer holdings.

Marszalek stated that he anticipates to release an audited “proof of reserves” within thirty days. He stated that he understands the consumers’ need for a faster audit release, but that auditing firms “don’t run on crypto speed.”

“The purpose of the audit is to independently confirm that our reserves match each and every currency on the platform,” he explained.

A non-audited proof of reserves handled by blockchain analysis firm Nansen revealed last week that 20% of’s assets were stored in shiba inu, a so-called “meme token.” Marszalek explained on Monday that this was simply a reflection of the assets that clients were purchasing.

“We keep everything our customers purchase, and it just so happens that doge and shib were extremely popular meme coins last year,” he said. “As long as our users continue to have it, we will continue to hold it. We have no influence over what you purchase.”

He noted that has never in its history used its CRO coin as collateral for a loan.

Marszalek stated that had transferred $1 billion to FTX over the course of a year in order to “hedge” consumer purchases. When FTX shut down, “only had exposure of less than $10 million,” he noted.

“Every time a consumer submits an order to purchase or sell, we have many venues where we could hedge this order, and we choose the most cost-effective one with the best liquidity and lowest cost so that we can pass these savings along to our customers,”’s CEO explained.

This means that we are always market neutral and do not take any market risks. However, this also implies that there must be financial flows between our venue and other venues in the business, FTX being one of them.

According to Marszalek, has 70 million users worldwide and generated $1 billion annually in 2021 and 2022. The corporation made headlines in 2021 for its massive marketing partnerships, including the renaming of the Staples Center as Arena and a commercial starring celebrity actor Matt Damon.

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