Recently, Crypto.com has been thrust into the spotlight of controversy after an alleged reversal of a substantial token burn process involving 70 billion Cronos (CRO) tokens that were initially declared permanently destroyed in 2021. This move has drawn sharp criticism from the crypto community, who argue that it compromises the foundational principles of decentralization and transparency within the cryptocurrency sector.
The uproar began on March 25 when on-chain investigator ZachXBT took to X to accuse Crypto.com of reintroducing tokens that were previously removed from circulation. He stated, “CRO is no different from a scam,” expressing concerns that this reissuance accounted for 70% of the overall token supply and diverged from the expectations of the community. In his post, he contended, “Your team just reissued 70B CRO a week ago that was previously burned ‘forever’ in 2021, going against the wishes of the community because you control the majority of the supply.”
This decision to reissue the tokens appeared to coincide with reports regarding a non-binding partnership between Trump Media and Crypto.com aimed at launching U.S. crypto exchange-traded funds (ETFs) via Crypto.com’s broker-dealer, Foris Capital US. ZachXBT expressed bafflement over why Truth Media would prefer collaborating with Crypto.com instead of other established exchanges like Coinbase, Kraken, or Gemini given the recent developments.
Suddenly increasing the circulating supply of tokens can lead to a dilution of value for existing coins, often triggering a decline in prices driven by the mechanics of supply and demand.
CEO's Justification Amidst Backlash
In light of the growing criticism, Crypto.com CEO Kris Marszalek defended the company's actions. He explained that the decision was essential for fostering investment growth in light of the evolving political landscape in the United States. During a March 25 AMA on X, he remarked, “Cronos and Crypto.com have been operating independently for years. The initial token burn in Q1 2021 was a defensive maneuver. At that time, it was justifiable. Now, with strong support from the new administration, the war on crypto has concluded [...] We need an aggressive investment approach to succeed.” He added, “This is what the community desires; we should be thinking in terms of dollars, not cents.”
Worries About Governance and Decentralization
Beyond the immediate financial implications, critics have raised alarms regarding potential manipulation of the governance process that facilitated the CRO reissuance. Reports from March 19 indicated that Crypto.com’s validators wield approximately 70% of the voting power on the blockchain, raising concerns that they can effectively nullify community votes.
As per sources cited by Laura Shin in Unchained, it is claimed that Crypto.com controls between 70% and 80% of the total voting power, effectively diminishing the necessity for any genuine governance voting.
In response to the ongoing controversy surrounding the return of 70 billion CRO tokens, Marszalek took to X on March 19 to assure the public of the firm’s financial stability and regulatory standing.
Overall, Crypto.com had initially announced the 70-billion-token burn in a now-deleted blog post from February 2021, characterizing it as the "largest token burn in history," with the intent of achieving complete decentralization at the time of the CRO mainnet launch. The blog emphasized, “In alignment with our vision, and with the CRO chain’s mainnet launch approaching, we are fully decentralizing the chain network,” proclaiming the immediate destruction of 59.6 billion tokens.
