On Wednesday, November 9, 2022, digital currency exchange Crypto.com put a hold on Solana (SOL) USDC and USDT withdrawals and deposits. The platform claims that “recent industry events” were the cause of this activity.
2022 Meltdown 2.0
These events are the spectacular collapse of Sam Bankman-Fried’s FTX ecosystem. This project is imploding, and Binance will no longer be coming to its rescue. The fallout threatens to affect the entire crypto verse.
According to Crypto.com’s Wednesday announcement, this suspended activity will occur immediately. The FTX failure did impact the SOL blockchain, with almost $800 million in Solana units due to be unstaked. Yet coins on other blockchains, including Cronos and Ethereum, will not see any impacts from the FTX meltdown.
Kris Marszalek, the CEO of Crypto.com, tweeted that due to FTX being a significant bridge for SOL, the trading platform did not want users to face any risks; thus, SOL traffic was disabled.
At its heart, Solana is what is known as an innovative contract platform and is designed to be a direct competitor to the crypto giant Ethereum.
A large amount of the total supply of SOL units is controlled by FTX and Bankman-Fried’s trading firm Alameda Research. It is no surprise that in the wake of FTX’s failure, the SOL token lost over 40% in value on Wednesday. Trading at just $14.37 per unit, this is 92% lower than the token’s worth just one year ago.
A burning question is whether Crypto.com is working in its best interest or that of its customers. An October article shed light on some of the problems the trading platform was enduring.
An attention-grabbing ad during the 2022 Super Bowl attracted a high of 50 million registered users on Crypto.com. The company needed more time to be ready for this seismic growth. Instead of flourishing, it fizzled.
Results included layoffs, onboarding incentives that fizzled, and even questionable ties to Wirecard, a company known for fraud.
The Misfortunes of Crypto.com
Red flags of this breakdown at Crypto.com began with the Super Bowl commercial itself. While the company footed the bill to have Matt Damon deliver their message, it should have spent the money on better writers. Pliny’s famous quote, “fortune favors the bold,” was incorrectly used as the word “brave” replaced “bold.”
By June 2022, the trading platform had laid off up to 2,000 employees. Marketing was also facing problems as this department stepped away from a deal with the soccer team Angel FC and dramatically reduced sponsorship amounts to a Twitch e-sports channel. Cryto.com also ran afoul of the UK Advertising Standards Authority and had to adjust its message.
Right now, all SOL investors can do is wait until activity can resume. And it is not just the fate of the token weighing on their minds, but that of Crypto.com. This isn’t the first time 2022 has seen a tremendous crypto collapse, but scores of people will not lose sleep if this is the last of the year.