Crypto exchanges Kraken and BitMEX top the rankings proof-of-reserves (PoR), while Binance ended up in last place due to incomplete coverage. Nick Carter, general partner of Castle Island Ventures, came to similar conclusions.
no one asked for it, but here it is anyway: my 2022 Proof of Reserve year in review https://t.co/x6UjmHTrms
— happy nic year (@nic__carter) December 29, 2022
When ranking the platforms, the specialist considered such parameters as cryptographic confirmation of existing assets, the availability of user access to information about the obligations of the exchange and the nature of their disclosure, as well as the involvement of a third-party auditor.
Additional criteria were the use of PoR in relation to other digital assets, in addition to bitcoin, and the regularity of the procedure.
According to Carter, Kraken gives customers “a good level of assurance” with no hidden obligations. He also praised the platform’s commitment to conducting PoR on a semi-annual basis.
BitMEX was at the top of the rankings despite the absence of an auditor. The expert placed it in first place thanks to an extremely transparent model, which showed both the presence of bitcoins and the possibility of spending coins due to multi-signature. The obligations and balances of BitMEX users were presented in the form of a complete Merkle tree.
“In other words, there are no issues with excluded or negative balances. Anyone can check the commitment set in its entirety,” Carter wrote.
The lower number of points was assigned by the general partner of Castle Island Ventures to Binance. He explained the decision by saying that platform CEO Changpeng Zhao “has not yet accepted his own challenge.”
“First report does not provide reliable guarantees. This only applies to Bitcoin, which is only 16.5% of their client holdings. [Binance]»Carter explained.
The specialist emphasized that the PoR does not disclose the full scope of obligations, which makes it difficult for a third party to verify the procedure.
Recall that Bitstamp US CEO Bobby Zagotta admitted that the Proof-of-Reserves procedure will restore retail investor confidence in trading platforms.
Earlier in SEC urged investors not to trust audits of bitcoin exchanges.
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