Key Takeaways:
- An investor lost 89,000 Crypto.com Coins (CRO) tokens from the crypto exchange Poloniex.
- The incident happened after the exchange decided to de-lit CRO at the end of last year.
- The incident sheds light on the shady workings of crypto exchanges.
YEREVAN (CoinChapter.com) — An investor has recently had the shock of their life after discovering that a large chunk of their investment is missing. As many as 89,000 Crypto.com Coins (CRO) vanished from his account on the cryptocurrency exchange Poloniex, and he is now looking for ways to retrieve them.
However, based on the reply from the cryptocurrency exchange, one can assume that his savings are lost forever. Here is what happened and why Hodlers should never keep their funds on exchanges.
Investor trusts Poloniex and loses his CRO tokens
In a short Twitter thread that reveals his shock, anger, and disappointment, the investor, who goes by the name Cayko, narrated how he ended up losing his hard-earned money.
Exactly one year ago, on 9 May 2022, Cayko deposited 20,000 USDT tokens on the crypto exchange Poloniex. Through several transactions, he used these tokens to buy Crypto.com Coins (CRO). In total, he purchased around 89,000 tokens at the price of $0.223 per token, according to the screenshots of the transactions.
He then placed a very high open target sell order on his newly-purchased tokens and signed out.
However, his balance was zero when he logged into his account one year later. Since the price of CRO did not appreciate reaching its high target price, the exchange had not executed any sell order. Hence, he expected his 89,000 CRO tokens to be safe in his wallet.
But they had vanished, and he had not received anything in exchange. Digging into the account’s transaction history did not show any withdrawals either.
Desperate, he turned to Poloniex for an explanation. Although their answer clarifies, it points out how much power these crypto exchanges have. They can keep your funds, and there is little you can do about it.
Poloniex explains what happened to the CRO tokens
In what came as a surprising revelation for Cayko, Poloniex informed that the investor could no longer claim his CRO tokens and that there was nothing they could do to help him.
According to the clarification, the exchange had delisted CRO from their platform at the end of last year. Moreover, they had announced November 30, 2022, as the final withdrawal date of the token. Failing to withdraw until the given deadline would result in losing funds.
“As part of the Poloniex team’s continuous efforts to improve the performance of the exchange and to better serve our customers, we may delist certain assets from time to time…Based on our most recent review, we have decided to move forward with delisting the following assets from Poloniex: Crypto.com Coin(CRO)…Withdrawals are currently enabled and will be disabled on November 30, 2022 at 10:00 UTC,”
the announcement from last year read.
Although the crypto exchange claims it had sent an email with this message to all traders, Cayko does not seem to have received it. Just like that, he lost his money without anyone willing to take responsibility.
While it may seem like the cryptocurrency exchange has given fair notice, the entire phenomenon is wrong. It reeks of mismanagement and scam.
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The problem with what Poloniex did
We already know that keeping money in cryptocurrency exchanges is risky.
Frequent hacks and attacks by scammers have become commonplace. According to blockchain analysis firm Chainalysis, crypto hackers stole $3.8 billion in 2022. That number was $3.3 billion in 2021 and just 500 million in 2020.
However, if hackers were not enough, now you can lose your funds to the cryptocurrency exchanges too. Like Poloniex did with Cayko’s tokens, any exchange can announce that they are locking withdrawals of a particular cryptocurrency after a certain date. Your funds will be safe if you are lucky enough to see their message on time. If you don’t see and remain in the dark, as in this case, you can say goodbye to your hard-earned money.
The incident makes exchanges look suspicious. There are so many legit questions that come to mind.
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What happened to all the CRO tokens?
What happens to the private keys after an exchange delists a token? If they continue to have private keys, why not allow traders to have their funds back even if the set deadline has passed?
Moreover, what do these exchanges do with all the unclaimed tokens? Do they just keep them as some battle loot? Do they burn them? Is there any third party that gains custody of the funds until the owners claim them? Can an exchange decide to keep your funds because they gave you a couple of weeks to claim them, but you failed to do so?
What if there were objective reasons why an investor couldn’t claim their tokens? Like, say a Hodler meets with an unfortunate accident and has to be bedridden for months? Or what if I am undergoing a serious medical condition and have been in a coma during your deadline? Do you keep my funds because I could not possibly claim them when you announced the withdrawal deadline on CRO tokens?
Can it be possible that my dad had all the CRO tokens, and he passed away recently, and I got hold of his wallet late? Does Poloniex get to keep the tokens because my dad died on the wrong date?
In any case, what was the total cost of all the unclaimed tokens that Poloniex decided they had the right to confiscate? Shouldn’t a sponsor program be in place to guarantee that we get our funds back if we cannot complete withdrawals on time?
These are serious questions that cryptocurrency exchanges should ponder over and address. Thousands of long-term investors buy tokens and keep them on exchanges for the future. Granted, they shouldn’t keep funds on exchanges in the first place, but if they do, does it mean they suddenly don’t own them anymore? Who gave these exchanges such arbitrary powers?
We also contacted Poloniex and Sun for a comment on the matter. However, at the time of press, our emails remain unanswered.
