Misappropriation of assets, insolvency? WOO X's response is all false information
Original Author: Nancy, PANews
Original Author: Nancy, PANews
In 2022, after CoinDesk broke the news that the balance sheet of FTX’s hedge fund Alameda Research had great hidden dangers, it indirectly triggered the collapse of FTX, and the truth about related transactions between the two and misappropriation of user assets also surfaced in subsequent investigations. .
On May 23, Karlstack media investigative reporter Chris Brunet also issued an article warning that the decentralized encryption trading platform WOOX had similar problems with FTX's capital reserves, and suspected that the platform had embezzled user assets for investment and caused insolvency. In this regard, WOOX denied it and said that users can decide their own risks, and more liquidity service providers will be introduced in the future.
WOO Network is a liquidity network incubated by Kronos Research, the world's top five cryptocurrency quantitative trading team, in 2019. It has received tens of millions of dollars in investment from institutions such as Binance Labs, Three Arrows Capital, PSP Soteria Ventures, QCP Capital, and Gate Ventures. . WOO X is the flagship product of WOO Network. It is a trading platform for professional traders. According to public information, Kronos Research’s initial role is to guide liquidity on WOO X Global and provide instant deep liquidity for various token pairs , help the platform attract traders and obtain key users, and encourage other market makers to further enter the market to improve liquidity. To put it simply, similar to the relationship between FTX and Alameda Research, WOO X also has a hedge fund Kronos Research.
Judging from the content released by Chris Brune, he suspects that Kronos Research uses customer deposits to engage in risky activities from various aspects of data and terms of service, and WOO X is insolvent.
Chris Brune pointed out that the terms of service of WOO X show that WOOTECH Limited has the right to decide at its own discretion to lend some or all of the digital assets held by users under the WOO X account to market makers, which means that market makers such as Kronos Research can have unrestricted access User deposits, while Kronos Research lacks transparency and accountability. The platform claims to adopt a delta-neutral strategy, but doubts about its credibility remain. Currently, Kronos is building an illiquid portfolio similar to FTX, using user deposits.
Although WOO X clearly stated in the terms of service that it would not use user deposits for speculation, Chris Brunet raised strong concerns after analyzing WOO X's asset-liability ratio.
First of all, judging from the escrow ratio announced on the WOOX official website, it can only cover about 84.7% of the deposited funds. Judging from the ratio of assets in the figure below, it is like "the platform account has $126.56, but the debt is $150.58." Chris Brunet believes that although the degree of insolvency is not yet known, it is a fact. It is worth mentioning that a brand ambassador of WOO X also admitted in a private message, "The model of this platform is controversial, let us face it squarely."
Not only that, but from the asset reserve certificate of WOO X, nearly 42.6% of the assets are composed of platform Token WOO tokens, and the proportion of stable coins, Bitcoin and Ethereum is about 36.9%. According to the third-party data platform Nansen, 77.6% of the assets in the WOO X treasury are composed of WOO, which is much higher than the data disclosed by the platform. You must know that Alameda Research has previously been disclosed to hold too much FTX platform currency FTT and related token Serum in its total assets, causing market concerns. Once the loss of user trust causes WOO to plummet, then the stampede and fleeing of users will make WOO Falling into a death spiral, investors may face a situation where they cannot withdraw their assets.
Regarding Chris Brunet's doubts, WOO X said in response to Wu said that the doubts raised by Chris Brunet can be verified as false information through public data. In addition to being stored in custody, user assets are also scattered on 5 different third-party platforms. Users can check the specific amount on other platforms and decide their own risks. The main asset of users in WOO X is WOO, so it accounts for a relatively high proportion. Not only that, WOO tokens will not be used as collateral for external loans, users can also view the status of assets and liabilities excluding WOO token reserves in the dynamic balance sheet, and reflect any changes in asset holdings in near real time. As for the data difference on Nansen, WOOX said that it uses two service providers to host user assets. As mentioned on the WOOO X dashboard, there are Fireblocks and Cobo. Currently, Nansen only includes the managed assets of Fireblocks. The reason is that Cobo User assets are managed through a comprehensive wallet, and Nansen's data cannot be tracked on the chain. In addition, WOO X also stated that both Kronos Ventures and WOO Network are independent business entities. Kronos Research is limited to providing liquidity on WOO X rather than speculating, and the platform will introduce more liquidity providers.
In fact, Chris Brunet also pointed out the lack of specific evidence in the article, but he also said that the original intention of all doubts was not to incite users to run, and the exchange should have the ability to resist external scrutiny.
