- Crypto.com’s alleged re-minting scandal comes as it partners with Trump Media to launch crypto ETFs under the Truth.Fi brand, prominently featuring CRO.
- Questions have also been raised about Crypto.com’s ties to Binance and comparisons to the collapsed FTX exchange, given its dominance over CRO.
Crypto.com is accused of fraud after on-chain researcher ZachXBT accused the firm of quietly re-minting 70 billion CRO tokens that were earlier burned. The allegations have left investors in fear as the re-minting goes against the 2021 announcement of a token burn.
Crypto.com’s Token Burn Saga Revealed
The scandal comes on the heels of Crypto.com’s recent deal with Trump Media, a media and tech firm owned by U.S. President Donald Trump. The deal will see the launch of crypto ETFs under the Truth.Fi brand with CRO figuring prominently alongside Bitcoin and conventional securities. Yet the scheme remains awaiting regulatory approval.
In 2021, Crypto.com burned 70% of CRO’s total supply from 100 billion to 30 billion tokens. This was done in an effort to create scarcity and generate value. Nevertheless, blockchain analyst Laura Shin uncovered that Cronos Labs, the developer of the Cronos blockchain, chose to re-mint the 70 billion burned tokens to create a “strategic reserve.”
The move has undermined confidence among a lot of investors. One of the biggest backers of CRO called the action out for criticism. They stated, “A burn is a burn, burnt tokens shouldn’t be brought back to life.” The re-minting may render CRO inflationary, lowering scarcity and potentially diluting its price.
Currently, the total circulation supply of CRO stands at 27.4 billion tokens, with a market capitalization of $2.9 billion and a fully diluted valuation of $10.3 billion. Despite growing 33.6% in the past seven days, CRO has dropped 1.5% in the last 24 hours and remains 91% below its all-time high in 2021, as mentioned in our previous report.
The re-minting decision was passed through a community voting process, but Crypto.com’s dominance of the ecosystem has raised questions over whether the vote is legitimate. With reports indicating that Crypto.com holds about 80% of the voting power, it was able to dictate the outcome of the vote with ease.
Most people in the crypto community think this was a strategic power play. With reversal of the burned tokens, Crypto.com would have been able to retain control of the CRO ecosystem.
Connections With Binance & FTX?
Another crypto researcher, TruthLabs, compared Crypto.com to FTX, the now-defunct crypto exchange. He noted that both firms were members of the Silvergate Exchange Network prior to its closure.
Additionally, he pointed out Crypto.com’s dominance of CRO is similar to the way FTX dominates its own token, FTT. He also disclosed that both companies overinvested in sponsorship agreements: FTX with NBA franchises and Crypto.com purchasing naming rights on large sports arenas.
TruthLabs also connected Crypto.com with Binance, disclosing that a Crypto.com Polygon address was initially funded by Binance. He intimated that their connection could be more profound than normal business relationships.
For further context, while Trump Media is a participant in the proposed Truth.Fi ETFs, ZachXBT claims it’s not aware of Crypto.com’s purported fraud. Nonetheless, Crypto.com’s integral role in the proposed ETFs means that the scandal will most likely draw regulatory attention.
