Decentralized Exchange WOO X Shares Live Balance Sheet in Response to Insolvency Claim

Decentralized Exchange WOO X Reported to Be Insolvent

Investigation journalist Chris Brunet released a report on Substack, claiming that decentralized exchange WOO X is seriously insolvent, advising users to withdraw funds from the platform. In response, WOO X said on Twitter, "so a foreign language media misreported a story about WOO X being insolvent. Needless to say, we are not. Transparency has always been our core value and unfortunately that makes us a target for elaborate but false assumptions." In addition, the DEX posted the link of its Live Balance Sheet in the comment section.

In his report, Chris Brunet said that, similar to FTX having Alameda Research, WOO X has a dubious hedge fund called Kronos Research. "Although I lack concrete evidence, I suspect that Kronos may be employing WOO X's deposits for speculative purposes." he said.

In addition, Chris Brunet said that WOO X's custody ratio shown on its website is lower than 80%. "Even in the most optimistic scenario of a bank run, WOO X can only cover approximately 80% of deposited funds." Meanwhile, according to Nansen's data, over 76% of WOO X's reserve is in its own token $WOO.

However, according to WOO X website, the current reserve ratio of the platform is 127.7%, while the custody ratio is 80.8%. Regarding the fact that the custody ratio is below 100%, there has been an explanation on WOO X's website. "The custody ratio shows what percent of user deposit liabilities are stored with custodians or in cold storage, versus stored in third-party liquidity sources. Currently, some shares of users' deposits are utilized for hedging and liquidity aggregation on third-party platforms to provide the best price execution for traders on WOO X."

"Funds on exchanges are used solely for hedging and liquidity aggregation purposes, and are never used for speculation. The custody ratio reports the amount of user deposit liabilities safeguarded in custody and insulated from counterparty risk with third-party exchanges and market makers. Moreover, WOO Network monitors third-party credit-worthiness 24/7/365 to minimize counterparty risk. Assets exposed on liquidity sources can be recalled to custody if counterparty risk is deemed too high."

 

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