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Due to the crackdown by the Lithuanian banking regulator, Crypto.com customers are concerned about the safety of their account balances.
Earlier this month, the Bank of Lithuania told local payment processor Transactive Systems UAB that it had “existing customers (operators of cryptocurrency exchanges, operators of escrow cryptocurrency wallets, , exchange of virtual assets, loans using virtual assets)”
After examining Transactive, the Bank of Lithuania issued an order that “identified serious violations and shortcomings of the law on the prevention of money laundering and the financing of terrorism.” The order was issued on the basis of the “scale and severity of the identified violations” and will remain in place until the bank makes a permanent determination at a future date.
Transactive posted an “update” acknowledging the service interruption for “some customers,” but said that “funds held in accounts opened with us are safe. Funds are required by law. It is protected as is and will not be affected in any way.”
Among Transactive’s digital asset customers was Singapore-based Crypto.com. Crypto.com has responded to the loss of service by informing customers that euro deposits and withdrawals have been “temporarily disabled.” Crypto.com says it is in the process of migrating its Euro Fiat wallet to a new provider and estimates that this migration will be completed in approximately 72 hours.
More than a week after the announcement, many Crypto.com customers are still waiting for the exchange to complete this “transition.” Angry customers took to social media to vent, pointing out that Crypto.com had tried to paint the issue as a planned event, even though they hadn’t said anything until that date. rear Customers have publicly complained about the inability to conduct euro-based trading on the exchange. (UK customers report similar issues with GBP trading.)
To make matters worse, not all Crypto.com customers appear to have received the exchange’s email informing them of this service disruption. This caused some people to continue depositing euros transactively as the exchange did not update their app instructions sooner. Despite assurances that “your funds are safe,” many Crypto.com customers wondered how they would reunite with their funds deposited after Transactive’s crypto freeze, which did not appear as deposits on Crypto.com. I’m still waiting to hear from you.
This whimsical email wasn’t the only delayed update. Crypto.com’s status page currently states that “all systems are up and running”, but an entry in the “Past Incidents” on January 22 listed the euro trading disruptions as an “open incident”. The same was stated on January 23rd.
The client funds that Transactive was handling for Crypto.com could indeed be “safe”, but only because they were seized by Lithuanian authorities. If so, Crypto.com could maintain the ‘all is well’ facade by fulfilling small withdrawal requests for some customers, but processing withdrawals for all affected customers. requires one of the following: Until Lithuania releases the seized funds, or (b) dips into other customers’ deposits, like FTX, to maintain the illusion of solvency to fend off a bank run.
Maltese Money Confusion
As detailed by a Twitter user known as Cryptadamus, Crypto.com will resume some euro trading by instructing customers to send money to a Malta-based company called Foris DAX MT Limited. is ready. The name is similar to Foris DAX Asia, where he was listed as a beneficiary when Transactive was still processing deposits.
However, many traditional banks appear to be reluctant to deal with Malta-based financial institutions, resulting in transaction cancellations when Crypto.com customers attempt to deposit into Foris DAX MT. There was a series of reports that
Crypto.com also uses OpenPayd, a processor with offices in Malta, London and Istanbul. OpenPayd’s website proudly cites the Bitfinex exchange as one of its most prominent customers and provides a “case study” of how OpenPayd helped accelerate Bitfinex’s trading by offering a “virtual IBAN”. ” is offered. [international bank account numbers that facilitate cross-border transactions] Connect to the Single European Payments Area (SEPA) payment rail for euro-denominated deposits and withdrawals.
For starters, Bitfinex is owned by iFinex, the same parent company as the Tether (USDT) stablecoin. Both Bitfinex and Tether are closely associated with highly questionable activity, and OpenPayd’s use of his Bitfinex as a business relationship is highly questionable.
Are Binance withdrawal issues linked?
The Lithuanian crackdown may help explain the problems Binance exchange widely publicized last week with euro- and sterling-based withdrawals. Binance has suffered a record outflow of funds since his November, but last week, several of his Binance customers in Europe reported that both Binance’s website and app suddenly had a “withdraw” button for unknown reasons. Reported missing.
Binance has responded with a flat-out standard playbook that denies the existence of the problem. was done later. Bitzlato was a relatively small player, but was noted for his Hydra “darknet” markets in Russia and dealings with a primarily criminal customer base.
The US Department of Justice (DOJ) has singled out Binance as the largest recipient of Bitzlato. Reuters later reported that Binance has processed more than 200,000 transactions for Bitzrat customers, including about $346 million worth of BTC.
Over the past few years, revelations of this kind have been ringing out constantly about Binance’s disregard for compliance. Bitzlato’s episode could have been the final straw for Lithuania if Binance was in business with her Transactive. Binance will also become increasingly dependent on the kind of payment processors other banks don’t want to touch a 10-foot pole.
“Crypto” Circle of Life
Back on Crypto.com, it appears that at the same time as they were realigning European financial trading, the exchange also made changes to its American banking connections. In June 2021, Crypto.com announced a deal with USDC stablecoin developer Circle. This will allow the exchange user to transfer fiat currency to Circle and on Crypto.com he will be credited to USDC.
In November 2021, Crypto.com announced a “merger” with Silvergate Bank. Silvergate Bank is a crypto-friendly US bank that previously counted Binance and FTX/Alameda Research as customers. The integration will allow Crypto.com institutional investors to use Silvergate’s controversial Silvergate Exchange Network (SEN) to transfer US dollars to and from Crypto.com in real time, 24/7. became.
However, Crypto.com retail customers were also directed through Silvergate to make US dollar deposits identified as the beneficiary, Circle Internet Financial Inc. This is similar to the ruse Sam Bankman-Fried ran at his Silvergate, telling FTX customers to transfer money to their banks. It cites Alameda as a beneficiary. (Alameda was supposed to transfer the cash to FTX, but SBF simply deposited the amount into the FTX account without accepting cash to support these “deposits.”)
Currently, Silvergate deposits on Crypto.com have the following beneficiaries listed: Cro Ducks Limited, a Cayman-based company. who will be tomorrow Our money is in CRO MAGS Limited. Because I want to know how mad his Legend of New York Hardcore gets when someone takes his identity for inappropriate purposes.
As Crypto.com’s hop-skip-and-a-jump international banking ties heat up, more questions arise as to the appropriateness of Crypto.com’s effective use of proxies to access the US banking system. . laundry scrutiny.
Recall that in 2021, Silvergate CEO Alan Lane memorably described a BTC-collateralized US dollar loan offered by the bank via SEN as a “disapproved product.” In other words, regulatory boundaries were seen as inconvenient and nothing more. Given that Lane has already come under fire from the U.S. Congress for failing to report suspicious transactions related to FTX/Alameda, Silvergate’s SEN-handling cryptocurrency firms better get their houses in order. Good.
Alex, make a selfish deal for $3 million
Crypto.com founder Alex Marszalek founded Fortis Ltd in Hong Kong in 2016 and launched the Monaco digital asset exchange rebranded as Crypto.com in 2018.
Crypto.com embarked on a path to notoriety after making a bad deal that spent $700 million on naming rights to the Staples Center, home of the LA Lakers. Notorious Fortune favors Brave Ads starring Matt Damon.
Following these hefty spendings, the arrival of “crypto winter” has forced Crypto.com to lay off hundreds of staff. Clearly, Marzarek forgot that “numbers go up” is a marketing slogan, not a guarantee of future performance, but based on long-term planning.
Crypto.com has not yet been subjected to FTX-level deception, but Marszalek was the subject of a very offensive CNBC profile in December. The article detailed Marzarek’s pre-crypto business deals, including a 50% stake in a Hong Kong-based high-tech manufacturing company called Starline, which went bankrupt in 2009.
In the two years preceding Starline’s demise, Marzarek and his business partners were paid about $3 million by the company. A judge later called this a “coordinated effort to strip Starline of cash.” The same judge found Marzarek’s justification for certain transactions “essentially unbelievable.”
Some Crypto.com customers have expressed similar observations regarding the exchange’s explanation of the current issue.
BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple,
Ethereum, FTX, Tether – embraced the digital asset revolution and turned the industry into a minefield for naive (and experienced) players in the market.
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