Withdrawals Rise After CEO Admits Transaction Problem

Customers pulled funds from over the weekend after the company’s chief executive said the cryptocurrency exchange mishandled a roughly $400 million transaction. Chief Executive

Kris Marszalek

said on Twitter that the transfer was sent to the wrong type of account on another exchange. The transfer of a large chunk of ether, a popular cryptocurrency, took place on Oct. 21, but came to light after Twitter users flagged the transfer as unusual, based on publicly available blockchain transaction records.

Concerns about Singapore-based spread across the internet over the weekend, with prominent digital-currency figures taking aim at the company. Cryptocurrency traders are on edge following the quick collapse of FTX, which went from one of the most trusted exchanges to bankrupt in the course of a week.

Changpeng Zhao,

chief executive at’s larger peer Binance, appeared to question the nature of the transfers without naming the company, which may have fueled Sunday’s withdrawals, according to crypto industry players. “If an exchange [has] to move large amounts of crypto before or after they demonstrate their wallet addresses, it is a clear sign of problems,” Mr. Zhao tweeted Sunday. 

The value of’s own cryptocurrency sank roughly 20% Sunday from the prior 24 hours. It traded near 6 cents apiece. 

Mr. Marszalek dismissed the concerns about, tweeting later on Sunday that the October transfers had “generated so much [fear, uncertainty and doubt] & speculation on Twitter” weeks later.

A spokesman for said that the platform was seeing higher levels of activity, noting that it had assets fully matching customer deposits. “Fluctuations in deposit and withdrawal activity does not affect our levels of service,” he added.

An outside analysis of’s public blockchain from Argus Inc., a blockchain analysis firm, showed that between 7 p.m. EST Saturday and 5:30 a.m. EST Sunday, users withdrew a net $14 million worth of the cryptocurrency ether and $39 million worth of other tokens tied to the Ethereum network from Over that same time, moved $33 million from other wallets to meet customer demands, according to Argus.

It appeared that had enough funds to meet user withdrawals, said Owen Rapaport, co-founder of Argus. is a midsize exchange. It has tried to raise its profile over the past year among retail investors. In late 2021, it sponsored the arena that is home to LeBron James and the Los Angeles Lakers, renaming it the Arena from the Staples Center. It also ran its first Super Bowl ad this year and is a global partner of Formula One.

The transaction that sparked concerns about involved the transfer of 320,000 ether—or roughly $400 million worth of the token at the time—to a wallet linked to crypto exchange on Oct. 21. 

Over the weekend, Mr. Marszalek said on Twitter that the transfer was supposed to be a “move to a new cold storage address,” but was sent to an external exchange address.

“We have since strengthened our process and systems to better manage these internal transfers,” he said on Twitter. 

A cold storage address is a type of wallet that is unplugged from the internet. It is considered the safest way to prevent digital currencies from being stolen or hacked. 

Mr. Marszalek said the company had worked with to return the funds back to its cold storage. 

“It’s not looking good for these guys in general,” tweeted Adam Cochran, founder of venture-capital firm Cinneamhain Ventures, which invests in blockchain-related companies. 

After FTX’s troubles began last week, a number of cryptocurrency exchanges, including, promised to publish proof of their reserves in the spirit of transparency. The audited proofs allow users to check that their own assets are covered by an exchange’s reserves.

Write to Caitlin Ostroff at and Elaine Yu at

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