Crypto Exchange CoinList Breaks Silence on Withdrawal Issue

After over a week that users have been unable to withdraw funds, the cryptocurrency exchange and Initial Coin Offering (ICO) platform CoinList has finally broken silence, citing technical issues as the reason for the problem and assuring users that assets are safe.

1/ There is a lot of FUD going around that we would like to address head on.

CoinList is not insolvent, illiquid, or near bankruptcy. We are experiencing technical issues that are affecting deposits and withdrawals.

— CoinList (@CoinList) November 24, 2022

While news has been going round that the platform is on the brink of collapse, the exchange asserted that it is not insolvent, illiquid, or close to bankruptcy. 

CoinList maintains that it is currently battling custodian issues in which some tokens (ROSE, CFG, FLOW, MINA) are not migrating as expected. It, however, emphasized that it is on top of the situation.

3/ As with any big undertaking, there are bumps along the way. Custodian issues mean some tokens are taking longer than anticipated to migrate (ROSE, CFG, FLOW, MINA).

One of our custodians had an outage yesterday unrelated to the migration that impacted many tokens on CoinList.

— CoinList (@CoinList) November 24, 2022

While the exchange offered an unreserved apology to its esteemed customers, it seized the medium to inform users that Proof of Reserves will soon be rolled out. 

4/ Once again, this is purely a technical issue, not a liquidity crunch. We hold all user assets dollar for dollar.

Regardless, this is not the quality of service we aspire to, and we apologize for the inconvenience. Proof of Reserves is on our roadmap.

More updates soon 🙏

— CoinList (@CoinList) November 24, 2022

Meanwhile, the company WuBlockchain on Nov. 24 disclosed scary information about CoinList that the platform incurred $35M loss in 3AC crash, which presupposes that the platform is currently in financial crisis. 

Some community members reported that Coinlist, the largest cryptocurrency crowdfunding platform, was unable to withdraw coins. The official reason is that the custody partner is undergoing maintenance, but it has lasted for more than a week. Coinlist incurs $35M loss in 3AC crash

— Wu Blockchain (@WuBlockchain) November 24, 2022

The explanation provided by the exchange citing “custodian issues” remains elusive to its users as there was no detailed explanation regarding what it means. A review of its status page indicates “degraded performance” for withdrawals.

The glitch displayed on the platform has made withdrawal for four cryptocurrencies unavailable since Nov 15 while deposit delay has been in place since Nov. 16

Conspiracy theory Between CoinList and Collapse FTX exchange

Against the backdrop that CoinList has been facing withdrawal and deposit issues following the collapse of FTX exchange, many users have alleged that it has material exposure to FTX and alameda research but this has been repeatedly denied.

2/ To address the elephant in the room, CoinList has no material exposure to FTX, FTT, Alameda or any credit exposure to any affiliate of FTX. We do not perform any actions with users’ funds unless explicitly authorized by the user.

— CoinList (@CoinList) November 14, 2022

CoinList harped on the fact that it does not perform actions with users’ funds except it is authorized by the user. 

It is only a matter of time as subsequent events will establish whether CoinList has material exposure to FTX or not. It is noteworthy that since FTX collapse, many platforms like Genesis Global, Grayscale Investments and Digital Currency Group have been struggling to survive.