Crypto.com denies funds were lost after ‘suspicious activity’, as security firm estimates $15 million went missing

• Crypto.com has resumed withdrawals after suspending them Monday to investigate unauthorized activity on accounts.
• The exchange’s CEO denied funds had been lost, despite Tweets from PeckShield inc. stating $15 million was lost
• The 14-hour outage comes after a UK watchdog banned several Crypto.com ads for misleading information.
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Crypto exchange Crypto.com started allowing customers to make withdrawals again, having suspended them Monday while it investigated reports that accounts had been broken into.

The Singapore-based exchange halted withdrawals after getting reports of suspicious activity on accounts, it said on Twitter.

The Crypto.com move came after worried customers said their funds had been compromised in posts to social media platforms. Entrepreneur and crypto enthusiast Ben Baller tweeted that he had 4.28 in ether, worth around $14,000 at the time according to CoinMarketCap data, taken from his wallet.

After a 14-hour outage, the company said Monday that withdrawal services had been restored, but warned it would take time to clear the backlogs.

“This update will be rolled out to users progressively over the next few hours. Once complete, withdrawals will be re-enabled,” it said in a tweet.

Crypto.com said it had beefed up the exchange’s two-factor authentication and advised people to update the security tool on its app.

The exchange’s CEO Kris Marszalek took to Twitter early on Tuesday to deny that any customer funds had been lost.

“Some thoughts from me on the last 24 hours: no customer funds were lost, the downtime of withdrawal infra was ~ 14 hours, our team has hardened the infrastructure in response to the incident,” he said.

“We will share a post mortem after the internal investigation is completed.”

While users await a full post explanation, blockchain security firm PeckShield, an etherscan.io recommended vendor, revealed about $15 million worth of ethereum had been lost. After analyzing data on etherscan, the Chinese security firm noticed that ethereum was being sent to Tornado Cash in batches of 10 and 100 ether. 

Tornado Cash allows users to keep transactions private, since ethereum transactions can be monitored on the blockchain by anyone sites like this allow users to obscure the link between the recipient and the sender. This function can then be taken advantage of by users that wish to launder cryptocurrencies. 

PeckShield was last in the news when they shed light on the $200 million worth of crypto drained from BitMart during a similar suspension in December last year. 

Crypto.com is currently under scrutiny for its advertising practises in the UK. Britain’s advertising watchdog banned two promotions in January, saying they were irresponsible and misleading for consumers. 

In November, Crypto.com bought the naming rights to the iconic Staple Center, home to the LA Lakers, Clippers, Sparks and the Kings. The  $700 million deal was part of a concentrated marketing campaign by the exchange, which includes an ads blitz with actor and investor Matt Damon. 

Government authorities across the world have tightened regulations for crypto, which has grown exponentially, becoming a $3 trillion industry at one point in November.