Crypto.com Under Fire After Reversing 70 Billion CRO Token Burn That Was Initially Promoted as a Move Toward Decentralization

Crypto.com is under pressure after a governance vote reversed a 70 billion CRO token burn that was initially promoted as a move toward decentralization.

Crypto.com is facing pressure after a governance vote reversed a 70 billion CRO token burn that was initially promoted as a move toward decentralization. The decision has sparked criticism, with many questioning the fairness of the voting process and the level of control the exchange holds over the Cronos blockchain.

The 2021 Token Burn and Its Reversal

In February 2021, Crypto.com announced the burn of 70 billion CRO tokens, calling it “a crucial step toward decentralization.” The burn was meant to prepare for the CRO mainnet launch, with 59.6 billion tokens burned immediately and the rest allocated for ecosystem growth and network incentives.

Now, four years later, the reversal has raised doubts about the original intent behind the burn. The decision to mint an equal amount of CRO back into circulation has led to accusations that Crypto.com’s governance structure may not be as decentralized as previously claimed.

On March 2, a proposal was introduced to create a Cronos Strategic Reserve by minting 70 billion CRO, effectively restoring the token supply to its original level. The vote opened on March 3, receiving heavy criticism from community members.

Several users took to X to express their frustration and urged others to reject the proposal. One user commented, “This is the worst possible decision they could make. Reversing the burn goes against everything the project stood for. It would be a shame if they didn's listen to the community.”

Another user added, “We’re once again seeing the direction pushed for CRO move away from what #Crofam has consistently asked for. This latest proposal to reverse the 2021 burn and re-issue 70 billion CRO into a ‘Strategic Reserve’ is the opposite of what this community wants. We’ve been vocal about needing less noise from the chain and more utility, and yet again, our voices aren’t being heard.”

The final vote showed an overwhelming majority in favor of the proposal, sparking further accusations of manipulation. A user on GitHub expressed their frustration, writing, “The vote passed at the last minute and it’s obvious why. When one entity holds the majority of the voting power, can we even call this governance?”

According to reports from Laura Shin’s Unchained, Crypto.com is said to control between 70% and 80% of the total voting power. If true, this would mean that community votes ultimately had little impact on the outcome of the proposal.

The backlash also unfolded on a community Telegram group, where messages from members showed their disappointment and anger over the upcoming vote on March 3.

“It seems like no matter what we say, they're going to do what they want anyway. We're just pawns in their game. Is this really decentralization?” one member asked.

Another member added, “I'm speechless. I don't even know what to say. I'm just disappointed and feel betrayed. They promised us they would listen to our feedback.”

The strong reactions to the decision come as Crypto.com CEO Kris Marszalek announced the company’s financial and regulatory position on X.

Some users questioned the move, with one commenting, “If the company is profitable, why not support the market instead of minting more tokens? This feels like a step backward.”

Announcing Crypto.com’s financial and regulatory position in 2024: We generated $1.5b in revenue and currently have over 140m users on the platform. The business is run in a very efficient way, after salaries and other opex, we have about $1b in gross profit to reinvest in the growth of the platform. Of that, users can see $500m went into our ecosystem fund (which is fully transparent on-chain) and $300m on salaries and opex, and we are investing another $200m in strategic initiatives (e.g., defi, scaling solutions, and the cronos ecosystem). We are also allocating $500m to pay interest to our high-yield savings users. Finally, we will be contributing $500m to the Cronos Strategic Reserve to support the long-term growth of the ecosystem.

— Kris Marszalek (@Kris_Marzalek) March 20, 2024

Announcing Crypto.com’s regulatory position in 2024: We are fully compliant with regulations in every jurisdiction in which we operate. As a global business, we are subject to a patchwork of regulations in different markets, and we take a conservative approach to ensure compliance. We prefer to err on the side of caution and have obtained all necessary licenses and registrations to operate in the markets we serve. We are also actively engaging with regulators to provide feedback and support the development of clear and consistent regulations for the crypto industry. We believe that constructive collaboration with regulators is essential for the sustainable growth