Is a crisis brewing at Crypto.com?

Crypto.com has terminated plans for a multi-billion dollar digital asset treasury (DAT) stock, it’s slashing rewards for cardholders, top executives have departed, and its proprietary token, CRO, has declined 70% over the past year.

Indeed, Crypto.com, Trump’s publicly traded DJT, and another publicly traded company with a ticker symbol that stood for “Make CRO Great Again” terminated their proposed multi-billion dollar business combination over the weekend.

The proposed DAT stock was supposed to be “the first and largest publicly traded CRO treasury company.” It will not be the first nor largest anymore.

In preparation for the ultimately unsuccessful business combination, it had even switched its ticker symbol from YORK to MCGA, an obvious play on Trump’s MAGA acronym. 

Kris Marszalek, Crypto.com’s CEO, forecasted MCGA would have become the world’s largest CRO holder, would have somehow exceeded the market capitalization of CRO itself, and would have kept its CRO purchases “forever.”

None of those forecasts came true.

The price of CRO slid below $0.05 on the cancelation news, its lowest price since October 2023, and the companies scrapped a second deal that had Crypto.com servicing ETFs by Yorkville America, the company behind the MCGA ticker.

As the once-solid relationship with the Trump brand showed signs of fraying, the three companies blamed “prevailing market conditions, and shifting business and stakeholder priorities.” Marszalek said “moving forward under current market conditions doesn’t make sense.”

The news made things worse for customers who were already upset about another Crypto.com decision. 

In late July, Crypto.com emailed cardholders that it would be reducing cashback rates and other cardholder rewards like airport lounge access. 

Specifically, as of October 1, the cashback rate of “Ruby” tier Crypto.com cards is dropping 50 basis points from 2% to 1.5%, and their monthly spending cap for those rewards falls from $1,250 to $750.

More importantly, “Icy White” tier cardholders lose their unlimited 4% cashback rate to a 3.5% rewards rate capped at $3,000 in spend.

Earning those rates required locking up CRO tokens, yet many cardholders noticed that the terms changed while their tokens remained locked.

“It’s about ethics and trust,” one argued, “it is reasonable to expect those conditions to be honoured for the agreed period.”

In addition to reduced cashback and lounge rewards, staking rewards for tokenholders who locked-up CRO for those card rewards are also reducing on September 10.

The Pro lock-up tier is dropping from 4% to 3%, and the top Private lock-up tier from 9% to 6%.

This is not the first time Crypto.com has lowered its incentives for cardholders. In May 2022, it slashed CRO card rewards so abruptly that community backlash forced a partial reversal within days.

Read more: Crypto.com breach exposed more data than CEO claimed, report

Crypto.com’s Chief Legal Officer Nick Lundgren resigned in April. Even though Crypto.com has a prediction market division, Lundgren joined a competitor, the prediction market Underdog, weeks later. 

Crypto.com’s Chief Marketing Officer Steven Kalifowitz, the executive behind the $700 million, 20-year Crypto.com Arena naming deal, stepped down on June 30. 

Chris Fargis, who oversaw Crypto.com’s prediction markets initiative, left on July 10 after less than a year in his role.

The departures followed deeper cuts. 

In March, the exchange shed 12% of its staff, around 180 jobs. The firm’s derivatives arm, meanwhile, sued Washington’s state attorney general in July, arguing federal law shields its sports prediction markets from state gambling regulation.

On August 2, crypto deposits and withdrawals stalled across all networks for roughly three hours. “All user funds remain completely safe,” the status page said.

CRO traded near $0.047 at time of writing, down roughly 48% this year, -71% over the past 12 months, 95% below its November 2021 peak.

Protos reached out to Crypto.com for comment but didn’t hear back prior to publication time.

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