Crypto.com Faces Allegations of Token Reissuance: A Community in Uproar
Overview of the Accusations Against Crypto.com
Renowned blockchain investigator ZachXBT has raised significant concerns regarding Crypto.com, accusing the exchange of reissuing 70 billion CRO tokens that were purportedly “permanently burned” in 2021. This action, labeled as “borderline fraud” by the investigator, has led to a substantial breach of trust within the crypto community. The controversy intensified following the announcement of a partnership between Trump Media and Crypto.com to introduce ETFs, where Crypto.com would manage backend technology and provide custody services, along with supplying cryptocurrencies like Bitcoin and Cronos.
ZachXBT’s Investigation and Critique
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ZachXBT, known for his expertise in exposing crypto scams, took to social media platform X to criticize the token reissuance and question the rationale behind Truth Social’s decision to partner with Crypto.com. He stated, “CRO is no different from a scam. Your team just reissued 70B CRO a week ago that was previously burned ‘forever’ in 2021 (70% total supply) and went against the community wishes as you control majority of the supply.” He further challenged the choice of Crypto.com over other established exchanges like Coinbase, Kraken, and Gemini.
Understanding the Scale of the Controversy
In a detailed follow-up, ZachXBT explained the magnitude of the issue: “Originally, the total CRO supply was 100 billion. In 2021, they executed a burn of 70 billion CRO, implying a maximum supply of 30 billion CRO thereafter. Now, 1-2 weeks ago, they reissued the 70 billion CRO that was supposed to be permanently burned. This is unprecedented for a major company.”
The Reissuance Proposal and Community Reaction
The reissuance became public knowledge after Unchained reported that Cronos Labs, the blockchain development arm of Crypto.com, had quietly initiated a governance vote on March 2 to remint 70 billion CRO into circulation. This proposal coincided with Trump’s announcement of a national strategic Bitcoin reserve.
The Impact of the Token Burn Reversal
Originally, the 2021 token burn was a strategic move by Crypto.com to eliminate 70% of CRO’s total supply, aimed at boosting token value and fostering trust in the project’s longevity. This initiative was met with positive community reception, as CRO prices surged during the 2021 bull market from $0.13 in February to $0.96 by December. However, the token currently trades at approximately $0.10, representing a stark 90% drop from its historical peak. The unexpected reversal of what was assumed to be an immutable burn has incited significant backlash from token holders.
Broader Implications for the Crypto Sector
Beyond financial implications, this incident challenges the foundational principle of immutability within the crypto ecosystem. Token burns are traditionally final, with tokens sent to a burn address considered irretrievable. This concept of permanence is a cornerstone of blockchain networks and is upheld by major protocols such as Binance, Ethereum, and Shiba Inu, none of which have ever reissued burned tokens.
Governance Vote and Community Control
On March 17, the proposal to reissue the tokens was adopted. Notably, the decision was influenced by large validators under Crypto.com’s control, reportedly holding between 70-80% of the total voting rights. At the time of writing, CRO is valued at approximately $0.10.
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