Representatives of the trading platform called the investigation misinformation

​Lookonchain points to the insolvency of the Gate exchange

15.11.2022 - 12:00

365

3 min

What’s new? Analysts at Lookonchain, a tracking platform, have allowed the possibility that the Gate crypto exchange may repeat the fate of the bankrupt exchange FTX. Experts came to this conclusion based on the analysis of the platform’s assets and transactions. The reason for their study was a tweet by an on-chain sleuth under the nickname ZachXBT, who reported that Gate concealed the fact of a $230 million hack that took place on April 21, 2018. Lookonchain also noted that the first transaction of the exchange’s hot wallet was made on the day of the exploit.

What is known about the exchange’s reserves? Experts analyzed Gate’s four Ethereum wallets and found that the exchange has only $479 million in assets. According to Lookonchain, Gate owns 71 million native tokens GT and 3,1 trillion Shiba Inu (SHIB) tokens, which is 61% of its total assets. The exchange also holds 53 930 ETH and 32 million USDT in reserve. This represents only 21% of the total assets.

Also on October 21, Gate received 320 000 ETH from the Crypto.com crypto exchange. Crypto․com CEO Kris Marszalek said the transaction was in error and the funds have already been returned to his exchange’s cold storage. Meanwhile, on-chain data shows that Gate returned only 284 975 ETH to Crypto.com between October 25 and 30.

Lookonchain noted that “coincidentally” the transfer of 320 000 ETH was made on the eve of the release of Gate’s reserve report. Finally, experts referred to a tweet from Binance exchange CEO Changpeng Zhao, who called it “a clear sign of problems” that exchanges move large amounts of cryptocurrencies ahead of or immediately after the publication of reserve reports, and urged them to “stay away” [from such companies].

Gate representatives later said that the misleading analysis only accounted for some of the platform’s assets, while failing to mention the publication of Lookonchain. The team also shared the address of one of the cold wallets, saying it has 140 000 ETH and other altcoins worth $200 million.

Gate.io (formerly Bter) is a centralized crypto exchange (CEX) established in 2013 in China. Against the backdrop of cryptocurrency bans in the PRC in 2017, it went under the management of the US company Gate Technology. As of November 15, the daily trading volume is $972,8 million, according to CoinGecko. There are 1534 coins and 2810 trading pairs available on the platform.

For which exchanges confirmed their solvency after FTX’s collapse, read GetBlock Magazine’s article.

Subscribe to Getblock Magazine and stay up to date with the latest news from the world of cryptocurrencies and the digital economy