According to a CNBC investigation, Crypto.com CEO Kris Marszalek was involved in companies that went bankrupt.
Despite the fact that no evidence of wrongdoing by the Crypto.com exchange has emerged, the trading history of its CEO, Kris Marszalek, is replete with red flags.
Following the collapse of a Kris Marszalek company in 2009, a judge called Marszalek’s testimony “unreliable.” Furthermore, his business activities prior to 2016, the year he founded Crypto.com, involved a multi-million dollar settlement of defective product claims and corporate bankruptcy.
However, Crypto.com has indicated that “there has never been a finding of wrongdoing under Kris’s leadership at his previous ventures.” This shortly after the CNBC platform will contact Crypto.com to collect information about Marszalek’s past and request an interview.
At the request of CNBC, Kris Marszalek published on Tuesday, December 6, a thread on Twitter in which he warned that more “FUD” was coming aimed at the exchange. Notably, “FUD” is short for fear, uncertainty, and doubt, a popular phrase among crypto investors.
“More FUD targeting Crypto.com is coming, this time about a trading failure I had very early in my career.”Posted Marszalek.
In the Twitter thread, Marszalek described his past personal bankruptcy, and the abrupt closure of his e-commerce business, as “learning experiences.” In addition, the CEO of the exchange, said that startups “are difficult” and “will fail time and time again.”
“I have nothing to hide and I am proud of my battle scars.” Marszalek expressed in his Twitter thread. “It’s important to note that my early failures made me who I am today: an effective trader, who knows how to grow a business and manage risk,” he added.
In 2004, Marszalek founded a manufacturing company called “Starline,” according to his LinkedIn profile. This company was based in Hong Kong and manufactured hardware products in China such as solid state drives, hard drives, and USB drives.
However, according to the CNBC investigation, there is much more history behind the Starline company.
Over the course of 2008 and 2009, Marszalek and his partner received nearly $3 million in unsubstantiated payments from Starline, according to documents.
In total, more than $1 million was paid to Marszalek in what the court argued were “disputed payments” and his partner took approximately $1.9 million in similar payments.
“It appears there was a concerted effort to extract the cash from Starline.” Said Judge Anthony Chan, in a court file.
It should be noted that both the company Starline and Kris Marszalek, were forced to declare bankruptcy at the end of 2009. This as a result of insufficient funds to pay the company’s credit lines, according to court records from 2013.
However, Marszalek indicated that this experience with Starline was ultimately “a difficult but fruitful learning opportunity.” This is because he was able to found a new e-commerce (Monaco, later renamed Crypto.com), the success of which allowed him to repay creditors outstanding debt with interest in 2012, leading to the cancellation of the bankruptcy petition of the 2009.
“Legally, this experience restored my status quo and cleared my name,” Marszalek said.
By 2021, the Crypto.com exchange had surpassed its own goals, surpassing the 10 million user mark.
In addition, the company’s revenues for that year exceeded $1.2 billion, according to the Financial Times. During said year, that’s when cryptocurrencies skyrocketed, with Bitcoin rising to over $68,000 in November 2021.
However, the crypto market crash this year has been disastrous for all major players and goes well beyond the crash of the FTX exchange and the many hedge funds and lenders that have also collapsed. For reference, shares of the Coinbase exchange have fallen 84% this year and the company laid off 18% of its staff, plus Crypto.com has also laid off hundreds of employees in recent months, according to various reports.
In light of this, on Friday, Crypto.com published an audited proof of reserves , certifying that client assets are held one-for-one, meaning that all deposits are backed 100% by exchange reserves. It should be noted that the audit was carried out by the Mazars Group, the firm in charge of accounting for the Trump Organization.