Crypto.com disables USDT and USDC deposits and withdrawals on Solana

Crypto.com has informed its users that it has currently disabled Tether (USDT) and USD Coin (USDC) deposits and withdrawals on the Solana Blockchain. Is the exchange running for cover after the price collapse of SOL?

Crypto.com and the suspension of USDT and USDC deposits and withdrawals on Solana

The platform, known for its major sponsorships and advertising campaigns, Crypto.com, has informed its users that it has suspended USDC and USDT deposits and withdrawals on the Solana blockchain.

It did so through email communication, justifying this action generically, writing as the reason: “recent events in the industry.” 

Solana (SOL) saw a significant price dump between Tuesday and today, dropping from $30 to the current $15, which is a -50% drop. 

The alert stressed that the change takes effect immediately and does not interfere with the use of the other supported networks. While it also stated that withdrawal fees for deposits on Solana are waived for two weeks starting 9 November.

Crypto.com: Solana suspension linked to FTX acquisition

In addition to the collapse of SOL’s price, which occurred more heavily than the price dump also suffered by Bitcoin (BTC) and all other crypto, the decision to suspend Solana could be connected to the acquisition of FTX. 

Confirming this, is directly the CEO of Crypto.com, Kris Marszalek in a tweet:

https://t.co/mX1xDEqWYz

— Kris | Crypto.com (@kris) November 9, 2022

“USDT/USDC on other chains operate normally of course. FTX was an important bridge/venue for SOL-based stablecoins, we do not want any additional risk to our users coming from this area, hence disabling it.”

And indeed, Marszalek underscores the importance of FTX for Solana-based stablecoins just after the news that Binance is in talks to acquire FTX itself, which is in crisis due to a lack of liquidity. 

At this point, Crypto.com’s decision is only one of precaution against what was an overexposure of FTX to Solana’s DeFi network, waiting for the situation to stabilize at least. 

Binance’s negotiation to acquire FTX

In recent days, FTX had to temporarily suspend withdrawals from its platform due to a lack of liquidity, after as much as $6 billion had been withdrawn within 72 hours.

A decision that caused the exchange’s failing native token, FTX Token (FTT), to plummet from $19 on Tuesday to its current $2.  

At the same time, however, the exchange asked for help from Binance, the largest and most popular cryptocurrency exchange on the web, which, despite its intervention, did not stop FTT’s collapse. 

Indeed, the tweet of Changpeng Zhao (or CZ), CEO of Binance, reportedly publicly declared his intention to acquire FTX, while awaiting the results of the Due Diligence (DD) that would confirm whether or not the deal could go through or not. 

This publication may have contributed to the collapse of FTT’s price, instead of supporting it. 

Crypto.com and its prestigious partnerships, while CRO does not go up in price

Over the past year, Crypto.com has collected a number of prestigious partnerships, but these have not helped drive up the price of Cronos (CRO). 

Not only that, despite officially being the first crypto sponsor of the FIFA 2022 World Cup last September, Crypto.com withdrew at the last moment from its five-year agreement with the UEFA Champions League, of which it was to be a sponsor worth more than $100 million annually.  

The reason for this choice was probably due to the long crypto winter that has seen cryptocurrency prices throughout this 2022 downtrend. 

Something that is happening again with Solana: Crypto.com is running for cover as the blockchain sees its most massive collapse and as FTX is in a liquidity crisis.