Major centralized cryptocurrencies storage and exchange ecosystem, Crypto.com (CRO)—well known for its crypto-fiat credit card system, has gone down today, Sept. 21, in the early morning hours (UTC). Kris Marszalek, CEO of the exchange, reported details of an accident and the expected recovery timeline.
Database issues provided opportunities for unfair arbitrage
According to the official announcement by Mr. Marszalek, the exchange encountered "issues" with the database connection. As a result, the outage followed and operations were damaged. However, tech savvy users noticed something strange and tried to benefit from it:
- DB issue on Exchange caused an outage (root cause still being investigated)— Kris | Crypto.com (@Kris_HK) September 21, 2020
- some users took advantage of the outage to manipulate ETH/USDT price
- they locked in gains by selling to other coins en masse
- tried to withdraw, were blocked by risk systems
They attempted to manipulate the Ethereum (ETH) price and take profis immediately. Thus, the traders of Crypto.com initiated a massive sell-off of assets to various coins. But once they tried to withdraw funds, malicious activity was stopped by Crypto.com security systems.
Mr. Marszalek admitted that, to deal with the aftermath of this accident, some trades and transactions considered "illegitimate" would need to be reversed. Pre-attack balances will be restored. The Crypto.com team estimates the approximate maintenance time to be 24-48 hours and stresses that it is very "complex" process.
To avoid such accidents in the future, Crypto.com will analyze what has happened and strengthen all systems, Mr. Marszalek emphasized.
So the funds are safe?
The CEO of Crypto.com confirmed that crypto and the fiat riches of its users are safe and unaffected by the accident. He estimated the overall monetary loss of Crypto.com as "negligible" due to the timely reaction of anti-fraud systems.
At press time, the Crypto.com App is up and running, while the Crypto.com exchange is still undergoing maintenance. Deposits, withdrawals and cross-asset trades are temporarily halted until further notice.
Recently, Crypto.com has expanded into the segment of decentralized financial instruments (DeFis). It invited all liquidity providers to participate in the DeFi Swap initiative.
Also, Crypto.com was among the first exchanges to allow purchasing of the much-overhyped UniswapV2 governance token (UNI) with credit cards.