Fears over Crypto.com + CZ's Masterplan

GM Readers! Monday's here. Let's hit the road.

Today's selection:

• Fears Over Crypto.com
• Binance Launches Crypto Recovery Fund
• Venture Monday
• Selected Meme of The Day
• Bite-Sized News

FEARS OVER CRYPTO.COM 

Just recently we wrote about how major exchanges have announced their plans to implement Proof-of-Reserve. 

Or to put it more simply, a proof that they actually have a reserve. 

Because FTX have taught both sides a lesson. 

For users - not to trust anyone blindly.

For exchanges - to better make sure that a simple balance sheet leak doesn't take down the whole empire down in a few days. 

Because if you have to hide something - it can't be good. 

And so, Crypto.com, a crypto exchange, partly revealed how their reserves look like. And it didn't look too reassuring.

20% of their entire token reserves consist of Shiba Inu Coin. Of the $2.88 billion in total assets, around $558 million, are in SHIB. Or to put it without filter:

20% of the entire token reserves consist of memes. If a crisis hit, this wouldn't create a simple liquidity crunch. This would be a speedrun towards insolvency.

If you gotta sell stuff in order to become able to pay back your loans... Things may get complicated when no one's willing to buy your stuff anymore. 

This sounded awfully familiar. Naturally, people started panicking. Crypto.com's token Cronos (CRO) immediately faced the consequences.

The token experienced a 60% price decline, falling from $0.178 to as low as $0.05. At the time of writing, the coin is worth around $0.07. It's slowly recovering.

In Crypto.com's defence, company described this situation as follows:

"The reason our Proof of Reserves include Shiba is because we hold customers' balances 1:1". Meaning the exchange's customers are huge SHIB fans. 

And if customers are happy with investing in it... The firm backs their holdings up in the exact same way.

TL;DR: 20% Crypto.com's reserves have been revealed to consist of SHIB coins. Many see this as a risky asset which may create the danger of insolvency one day.

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BINANCE LAUNCHES CRYPTO RECOVERY FUND

For over a week, Binance has been the main character of almost every crypto-related news. It continues doing so.

Binance is now called the last hope of the crypto industry. And this giant is really ready to save the situation.

The FTX crisis has caused a lot of uncertainty among investors and pushed Bitcoin to a new yearly low.

Lots of crypto enthusiasts are trying to find out whether other exchanges are manipulating their reserves as well.

Against this background, DeFi projects can feel most confident.

They have an open structure and anyone can check the information about reserves/transactions in the protocol.

Crypto wallet tokens experienced significant growth as well. Users finally realized that storing funds on the exchange is a dangerous undertaking.

What plan Changpeng Zhao will come up with - remains to be announced. Be sure we'll cover it asap once it's made public.

TL;DR: CZ is forming an 'industry recovery fund'. It could save the entire industry. It would also mean that Binance is the Sun King of the 'decentralized' industry.

Venture Monday

It's Monday. The day when we talk about what companies made big moves during the last week.

Crypto payments firm Ramp raised $70M in a Series B funding round led by Mubadala Capital and Korelya Capital. Cogito Capital and Balderton Capital are among investors.

What they're doing is connecting fiat (traditional finance) and crypto. Their goal is making easy for users to jump on and off of Web3 from anywhere.

Decentralized search startup Sepana raised $10M in a funding round led by Hack VC and Pitango First. Protocol Labs, Lattice Capital and Balaji Srinivasan are among the investors.

Sepana is building a search engine for the decentralized web, like Google but with blockchain settings.

Web3 communication infrastructure platform Notifi raised $10M in a seed funding round led by Hashed and Race Capital.

Struck Capital, HRT Capital, Wintermute, Superscrypt, Long Hash Ventures, NFT Bank, Protocol Labs, Cherubic, Metaweb Ventures, and many others are among investors.

They work on embedding notifications & messaging into dApps / blockchain applications.

SELECTED MEME OF THE DAY

BITE-SIZED NEWS

• Kraken Freezes Accounts Owned by FTX Group and Its Executives. FTX started at the top. Now they're here.
• Crypto.com Accidentally Transfers 320,000 ETH to Gate.io Address. Oopsie daisy.
• Crypto Exchange FTX Has Allegedly Lost Around $477 Million During a Hack. Misery likes company.
• OpenSea to Continue Enforcing Royalties for All NFT Collections. The auction house collects its toll.