My Experience with Crypto.com and Vanishing Funds

You might be surprised to learn that crypto exchanges can have full access to your funds at any time, and the balance you see could be misleading.

You may be even more shocked to learn that on Crypto.com, they can also seize misplaced funds deposited to your account. In other words, Crypto.com can take the funds associated with your wallet address and claim them as their own.

In our experiment, we deposited BSC USDC to our usual deposit address on Crypto.com after they had discontinued accepting such deposits. These funds were easily traceable on the BSC explorer. After the USDC was deposited, we reached out to Crypto.com's chat support to inquire about the funds, providing them with the transaction information.

We were initially reassured by the support team, who claimed that although BSC USDC deposits were no longer supported, the funds were securely stored on the blockchain. However, shortly after this conversation, the funds were transferred to another wallet address controlled by Crypto.com.

We contacted support again to inquire about the funds and why they were moved to a different address. Initially, we received a generic response, but we persisted and requested further information about the transfer and the reasons behind the movement of our funds.

We were informed that we could retrieve our funds but only if we paid a $100 fee for their return.

Why Take Funds that Don't Belong To Crypto.com?

Wait a minute, weren't we told that our funds were safe? Then Crypto.com moved them and now we have to pay $100 to reclaim our own money?

How does this work?

Most, if not all, centralized exchanges do not grant users direct access to their stored funds. Once the funds are deposited, they effectively come under the control of the platform, its systems, and the exchange itself.

The "balances" displayed on most exchanges merely represent tokens pooled together, rather than residing in an actual wallet. While certain centralized exchanges may have slight variations in their procedures, none of them allow users direct access to their balances.

Crypto.com employs a smart wallet system where the address remains the same for various interoperable chains such as BSC, Ethereum, and Polygon. While the address on the blockchain accurately reflects the balance of your funds, the balance shown within the app may differ.

Despite Crypto.com discontinuing BSC USDC deposits, the wallet itself continued to accept such deposits. Consequently, numerous users, accustomed to using their addresses, unknowingly sent funds even after the discontinuation. Although Crypto.com did notify users about the cessation, the reliance on a specific address naturally posed a problem for many users.

Unless the $100 fee was deemed worthwhile, most users likely ignored it, leaving the funds in their wallets.

Regardless of whether the deposits were made in error or not, those funds unequivocally belong to you and should have remained in your wallet. However, Crypto.com seems to disagree for some reason.

In fact, they moved the funds to their own wallet, charging regular gas fees, when they could have returned the funds to the sending wallets for a gas fee instead of demanding $100.

So, Where did our Crypto.Com deposit Ultimately End Up?

After Crypto.com transferred our deposit out of our wallet, it was placed in a controlled wallet managed by Crypto.com and has been subsequently moved multiple times.

We inquired with Customer Service about the reasons behind these moves, and their response was that it would be safer for our tokens to be under their management in order to maintain control over them.

The question remains, though: do they have the right to move tokens accidentally deposited to a wallet address under your app, to which you previously had access?

They refused to answer that question.

One would assume that regardless of Crypto.com discontinuing deposits, your tokens should remain your tokens. The funds still belong to you. As a long-time user, it felt more like theft than protection.

According to customer service, the funds are available if you are willing to pay an exorbitant price to have them returned; otherwise, they will remain under Crypto.com's control.

It appears dubious to take funds directly from a wallet. If a wallet no longer accepts deposits, but funds are still being deposited, those funds should stay within the wallet. At least, that is what one would assume when it comes to how wallets operate.

Could it be possible that Crypto.com benefited from events like terminating support for a widely used currency chain, knowing that users would still inadvertently deposit funds?

Could they then profit by making it expensive for users to reclaim those funds? Why move the funds to a centralized wallet when they do not belong to Crypto.com?

Perhaps that question would be best answered by Regulatory agencies, and not customer service agents on Crypto.com.