's errant $405 million deal sparks investors after FTX fiasco’s errant $405 million deal sparks investors after FTX fiasco

Crypto exchange is under the microscope after sending $405 million to the wrong recipient, raising alarm among crypto watchers after the whirlwind that unfolded this week from rival exchange FTX, which filed for bankruptcy on Friday.

Some crypto watchers reviewing the transaction speculated that it was an attempt to inflate trading volumes. To complicate the hype, the analyst who first took the trade turned out to be a employee rival exchange, Coinbase.

It also follows a mistake made in December when accidentally sent a woman in Australia $10.5 million instead of a $100 refund.

Kris Marszalek, CEO of said on Twitter that the transaction was an accident, while a company spokesperson told Yahoo Finance that the funds were intended to be sent to an offline crypto wallet, but mistakenly went to, a other crypto exchange.

Some crypto exchanges hold accounts with competitors to bolster liquidity during periods of volatility.

“Movement of funds from’s custody systems is only possible between approved and whitelisted addresses attached to our cold wallets, hot wallets (connected to the Internet), and corporate accounts on third-party exchanges,” the spokesperson said.

The logo displayed on a phone screen and representation of cryptocurrencies are seen in this illustrative photo taken in Krakow, Poland on September 28, 2021. (Photo Illustration by Jakub Porzycki/NurPhoto via Getty Images)

Still, the transaction sparked crypto investors who, in the past 24 hours, drove the price of’s exchange token (CRO-USD) down by 24%. For the same period, bitcoin (BTC-USD) fell less than 2.5%, while ether (ETH-USD) fell 2.5%.

The incident also follows an offer by a number of crypto exchanges to boost confidence during the week of FTX’s collapse by rushing to release their “proof of reserves”, showing that they do not don’t use investor funds.

Some crypto exchanges, such as US-based Kraken, have been using proof of reserves for years. Yet measurement may still fall short depending on how often and what portion of the balance sheet a company chooses to report.

In the best-case scenario, proof of reserves can prove creditworthiness, according to Sergey Nazarov, CEO and co-founder of Chainlink Labs, whose company offers a proof of reserves product.

“It shows whether the assets a company claims to have are actually available in real time,” Nazarov told Yahoo Finance of Chainlink’s product.

On Thursday, released its proof of reserves in its crypto wallets, saying it held $3 billion in total client assets. On Saturday, the figure stood at $2.55 billion, down 15%, according to wallets tracked by blockchain analytics platform, Nansen.

For the same period, OKX – the third-largest crypto exchange by trading volume after Binance and Coinbase – saw its assets increase by $114 million. It has $5.83 billion in assets – 64% is in ether (ETH-USD) and 25.8% in bitcoin (BTC-USD), according to Nansen.

Since last Sunday, Binance’s assets have grown by $4 billion, from $66.7 billion to $70.8 billion, according to Binance Wallets tracked by Nansen.

“Proof of reserves is great as long as you have proof of assets and liabilities,” Michael Anderson, co-founder of crypto venture capital firm Framework, told Yahoo Finance. “It gives you part of the story. It helps people know if a business is using its customers’ assets as collateral to borrow money.

David Hollerith is a senior reporter at Yahoo Finance covering cryptocurrency and stock markets. Follow him on Twitter at @DsHollers

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