dailycoin.com
- In the wake of the FTX collapse, crypto exchanges have struggled to maintain trust.
- Gate.io has found itself at the center of insolvency rumors.
- Rumors have driven customers to rush to withdraw their funds.
Centralized crypto exchanges have struggled to maintain trust in the fallout of the FTX collapse in November 2022. Despite launching features like proof-of-reserves to boost transparency, several investors have remained skeptical, allowing rumors to trigger panic easily.
In recent days, Gate.io has become the latest crypto exchange to find itself at the center of insolvency rumors. While the crypto exchange has dismissed these rumors, it has not stopped customers from rushing to withdraw their assets en masse.
Gate.io Records Most Outflows Amongst Crypto Exchanges
At the time of writing, Gate.io has recorded $158.49 million in outflows in the last 24 hours, per data from DeFiLlama’s CEX Transparency page. The figure is about five times higher than Crypto.com’s $30.88 million, the second-highest outflow. The withdrawals also equal nearly 10% of Gate.io’s total assets.
The run on deposits follows recent rumors of Gate.io insolvency fueled by a crisis affecting a separate cross-chain router protocol Multichain. Wallets labeled by Arkham Intelligence as belonging to members of the Multichain team had moved about $3 million worth of tokens to Gate.io on May 24, spooking Multichain investors amid rumors that the group had been arrested in Shanghai.
Following rumours of the @MultichainOrg team being allegedly arrested in Shanghai, some large holders of $MULTI have began moving funds.
— Arkham (@ArkhamIntel) May 24, 2023
Team wallets moving ~$3M of $MULTI to https://t.co/5ecSG3rKek have also spooked some investors, with $MULTI price falling 26.5% in 24h. pic.twitter.com/p2sQpu9Ass
At the same time, Binance halted deposits for ten Multichain bridged tokens citing transaction delays. On Wednesday, May 31, Multichain issued a statement disclosing that the Chief Executive Officer Zhaojun was unreachable. Following the release of this statement, Coinsumption, a highly followed crypto Twitter account, alleged that the Multichain crisis somehow affected Gate.io, urging users to withdraw assets from the platform.
[🍽] JUST IN:
— CoinSumption (@CoinSumption) May 31, 2023
Due to the CEO Zhaojun arrest and the Multichain treasury being backed by 30%. The Gate io team is having insolvency problems.
STAY SAFU AND WITHDRAW FROM https://t.co/wB7HFyhU5u. 🚨 pic.twitter.com/CKamkaOLaP
Gate.io notably issued a statement on the same day dismissing these speculations.
We would like to clarify that our operations are running healthily, withdrawals are functioning properly, and there are no issues with our operations or withdrawals as rumored," the firm wrote, adding that it was currently focusing efforts in Hong Kong, where it was launching a new platform.
Recent rumors have also impacted Gate.io’s token (GT) which at the time of writing is trading nearly 9% lower in the past 24 hours.
On the Flipside
- There have been no confirmed reports of Gate.io users having withdrawal issues.
- Gate.io claims to be the first crypto exchange to launch proof-of-reserves.
Why This Matters
The run on Gate.io deposits over insolvency rumors highlights the fragile trust in centralized crypto exchanges in the wake of the FTX collapse and the benefits of self-custody solutions.
Read this to learn more about Gate.io’s proof-of-reserves:
Gate.io Announces It Will Make Its Merkle Tree Proof of Reserves Solution Open-Source
Find out what Binance is saying about reports of layoffs:
Binance Denies Layoffs are ‘a’a Cost-Cutting Measure”