Cryptocurrency exchange Crypto.com wrote to customers today in an email seen by Decrypt to notify them that all deposits and withdrawals for Tether's USDT and Circle's USDC have been suspended on the Solana network.
The pause is effective immediately, but the email did not explain why the exchange chose to suspend these transfers.
The two stablecoins, USDT and USDC, exist on almost every blockchain, and the suspension only applies to users looking to move either asset on Solana. "You may withdraw USDC and USDT at any time using other supported networks, including Cronos and Ethereum," the email to Crypto.com customers read.
Crypto.com is a Singapore-based crypto platform that lets users buy and sell cryptocurrencies. The firm also has a native blockchain called Cronos, upon which more than 75 different crypto apps exist, according to DeFi Llama.
The company has not yet responded to Decrypt's request for comment.
Crypto.com adds to market chaos
The crypto platform's announcement comes amid one of the more chaotic weeks in crypto history, which reached an apex after Sam Bankman-Fried of FTX tentatively agreed to sell his exchange to competitor Changpeng "CZ" Zhao of Binance.
On Sunday, CZ announced that the firm would begin selling its stake in FTT tokens, FTX's native exchange token, that it had earned as part of its equity exit from FTX.
The proposed sale not only tanked the price of FTT but also apparently spooked FTX clients, who quickly began pulling funds from the exchange. As withdrawals escalated, Bankman-Fried then announced the potential acquisition resulting from the "liquidity crunch," suggesting that the firm did not have 1:1 reserves of customer assets.
Following the news, crypto firms scrambled to distance themselves from the troubled crypto exchange.
Among them was Crypto.com's CEO Kris Marszalek said the firm's "direct exposure to FTX meltdown is immaterial: less than $10 million in our own capital deposited there for customers' trade execution."
Besides FTX's woes, Sam Bankman-Fried also has deep ties with the Solana ecosystem.
Alameda Research, an algorithmic trading firm founded by Bankman-Fried, participated in a $314 million fundraise for Solana Labs, Solana's development team. FTX and Alameda also launched Serum, a popular decentralized exchange built atop the speedy layer-1 blockchain.
Thus, alongside FTT, the price of SOL has also tanked as investors continue to scramble. The token has plummeted by 48% in the last 24 hours and is now trading hands at just under $15.
In the past, amid extreme volatility and high congestion, Solana has buckled, reporting several occasions when the network came to a standstill. Solend, a lending and borrowing platform on Solana, has been unable, for instance, to execute liquidations due to this congestion.
The top of the platform's site reads: "Solana is currently congested with oracle updates being intermittent, users might face issues with withdrawing. All borrowers are disabled."
This type of congestion could very well ramp up again in the next few hours. Validators on Solana, the entities that verify Solana transactions as valid and are rewarded in SOL for doing so, are expected to unlock roughly $1 billion in SOL tokens. If those tokens are then sold on the open market, it could add further downward pressure to the price of SOL, as well as further pressure on the Solana blockchain.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.