- Crypto.com will reissue 70 billion previously destroyed Cronos tokens.
- Critics are panning the timing of the token recovery and the Trump deal.
- The recovered tokens will inflate the Cronos supply to 100 billion coins.
Trump Media & Technology Group, US President Donald Trump’s media company, announced a partnership with cryptocurrency exchange Crypto.com to launch exchange-traded funds.
But backlash in the crypto industry has been swift.
That’s because the crypto exchange and its subsidiary Cronos Labs also said they will reissue some $7 billion worth of their native Cronos tokens that were burned in 2021.
Burned tokens in crypto are supposed to be permanently destroyed, but in Crypto.com’s case, they can be re-minted to fund the Trump media deal.
Cronos whales with huge voting power swayed a governance vote last week to reissue the tokens, despite widespread opposition from holders who fear the move will dilute the value of their investments.
2021 plan
Back in 2021, the decision to burn the tokens was part of a deflationary effort to improve value.
Now, the tokens are being resurrected, and critics say the move erodes faith in the project.
“This isn’t just about Cronos, it’s about trust in blockchain. If one chain reverses token burns, where does it end?” Sam Grilli, chief operating officer at blockchain gaming outfit Kepithor Studios, posted.
‘Bold plan’
Other critics also questioned the timing of the move.
In an announcement last week about the vote to reverse the token burn, community members were told of a “bold plan” to support Cronos and its ETF as part of “America’s ambition to become the world capital of crypto.”
The reissued tokens will be set aside in a so-called strategic reserve to support Cronos' roadmap, which includes the ETF deal.
The tokens will swell the Cronos supply to 100 billion coins, worth some $10 billion.
Critics were quick to jump on the link between the vote and the Trump Media announcement on Monday.
Neither Crypto.com nor Trump Media responded to requests for comment.
Fault lines
A US president’s business endeavours raise conflict of interest concerns. The controversy also exposes deep fault lines in crypto, especially in the outsized influence of whales in corporate governance.
Almost 80% of the wallets that participated in the vote were against the proposed token recovery.
However, they only controlled 20% of the voting power.
This week’s backlash isn’t the first time Crypto.com has drawn controversy.
In 2020, Crypto.com fielded criticism from investors who were forced to swap the exchange’s former token MCO for Cronos. At the time, token holders deemed the swap unfavourable.
Cronos is up 22% on Tuesday, but it’s still down 90% from its peak price of $0.96 achieved in 2021.
Trump Media shares jumped almost 9% in New York trading.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. Got a tip? please contact him at osato@dlnews.com.
