Gate.io - The Next FTX

GM Readers! Tuesday's here. It's ours duty to bring you the bag with freshest news in it.

Today's selection:

• Worrying Signals From Gate.io
• Non-Custodial Wallet Era begins
• What Is SBF Up To?
• Selected Meme of The Day
• Bite-Sized News

IS GATE.IO HIDING SOMETHING?

We wrote about how major exchanges announced they're about to publish their Proof-of-Reserve to be transparent about their actual state as a response to FTX scandal.

We emphasized how Gate.io, a prominent crypto exchange, was an exception. They have been publishing their reserves in the Merkle Tree format for three years already.

But... It looks like that, despite being the most transparent, Gate.io still found themselves in the middle of something unnerving.Here's what happened.

On-chain sleuth (a blockchain detective) @zachxbt has just shared some interesting findings.

According to him, the exchange was hacked by North Korean hackers on April 21 2018. They managed to get away with $230 million.

And... No one knew about it. Allegedly, Gate.io managed to prevent the news from breaking. They 'actively kept this hidden from customers/public', as the sleuth put it.

What does this imply?

That if, hypothetically, there were more hacks like, and if they happened consecutively...

Exchange's customers would have continued using its services without realising, that they're dealing with a de facto insolvent company.Of course, it's not the case. But this story illustrates that exchanges' reserves are far from untouchable and safe. More has to be done in order to rebuild people's trust.

But that's not all. 

Blockchain analysts @lookonchain took a deep dive into Gate.io's Ethereum wallets, and found out that...

Their entire assets consist of only $470m in assets.

What's more worrying, the exchange holds only 53,930 $ETH ($59M) and 32M $USDT. That's only 21% of their total holdings.

This means that a significant part of their holdings are risky tokens. Which... Kinda sounds similar to FTX, doesn't it?

But here comes the good news. Thanks to diligent analysts, Gate.io had to respond, and clear up the confusion. Here's how the @lookonchain followed-up their tweet:

'We update Gate.io's assets on Ethereum after @gate_io provided their cold wallet. Gate.io's 5 wallets hold a total of $826.3M in assets.'

This shows that transparency was only achieved after applying pressure.

Gate.io responded to the unsettled crowds by saying that all is OK, and that reports about them hiding something are 'misinformation'.

But... They didn't say a word about the North Korea's hack that 'didn't happen'.

Bottom line here is this. Probably, are things that some huge exchanges don't want the public to be aware of. But the time has come for everyone to spill the beans.

And some of the revelations may be crucial.

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NON-CUSTODIAL WALLET ERA BEGINS?

FTX was a lesson for everyone.

Holding your funds in a crypto exchange... Doesn't look that safe after all.

Many people facepalm at conclusion like this. Because they remember the fates of exchanges like Mt. Gox. And from now on... FTX.

Because if someone else has access to your assets... it's not your assets.

You may think it's yours... Until you find out that a former Forbes billionaire sent them to Alameda Research so they could experiment in risky investments.

Not your keys, not your coins, as the classical line goes.

That's why non-custodial wallets are entering their golden age.

A non-custodial wallets, a.k.a. self-custody wallets, allow users to have sole control of their private keys. No one else, but the owner. Just how it should be.

Trustwallet just announced a web version of their wallet and their token gained +100% over the span of the week. Alongside wallets like Safepal, Xdefi, and C98 also show gains.

Cold-wallet producers benefited a lot as well.

This can transform into a real, aggressive battle between the two giants of non-custodial wallets. Trustwallet vs Metamask.

And when competition increases... New updates, features, possibilities, airdrops, and everything in between get announced way more often. We'll see what's up!

WHAT IS SBF UP TO?

Okay. Crypto Twitter (and the Internet in general) is confused.

The FTX's frontman, the now-infamous Sam Bankman-Fried, has been acting real weird lately.

And we're not talking about taking down an entire industry in less than a week.

Here's what he tweeted:

Well, the 'crypto king' became the 'cryptic king'. We've got only two questions:

1. What?
2. What happened?

But... We don't know. You tell us, Sam.

Since SBF single-handedly caused world's top cryptocurrencies to lose over $152 billion in market value, he's been up to various leisure time activities.

For example, he put on his Bahamas Penthouse for sale. The price? $40 million.

In addition, he gave an interview to the New York Times. In it, he expressed concern and regret over what happened to FTX.

Sounds very much like... Do Kwon, doesn't it?

Well, unlike Do Kwon, SBF said that he sleeps well, is not afraid of prison, and spends his free time gaming. Well... What else is there to do after leaving an entire industry in ruins.

SELECTED MEME OF THE DAY

BITE-SIZED NEWS

• Law Enforcement in the Bahamas Launched Criminal Investigation on FTX. SBF's stress levels are far from getting lower.
• Kraken Freezes Accounts Owned by FTX Group and Its Executives. FTX started at the top. Now they're here.
• 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.