The collapse of FTX in November 2022 continues to be a stark reminder of the need for rigorous asset oversight. This event catalyzed a move towards transparency, with crypto exchanges now disclosing more about their reserves and the management of user funds.
As November 6 marks the second anniversary of the collapse, only Bitfinex and Binance have seen their Bitcoin reserves grow from major exchanges.
Top Exchanges Step Up PoR Efforts
According to CryptoQuant’s latest report, among major exchanges, Coinbase remains the only one without a public proof of reserve (PoR) report, while others, like Binance, have adopted comprehensive transparency practices.
Binance, for example, provides proof of assets (PoA) via publicly available on-chain addresses, allowing users and stakeholders to directly verify assets. It also allows users to verify that their individual account balances are included in the exchange’s overall liabilities.
Beyond Bitcoin and Ethereum, Binance includes additional assets in its reserve disclosures, improving market trust and transparency. Binance’s Bitcoin reserves notably increased by 28,000 BTC (5%) to 611,000 BTC, even amid a regulatory review from US authorities in 2023.
Among major exchanges, only Bitfinex and Binance have expanded their reserves since FTX’s collapse, with the latter maintaining a reserve drawdown rate below 16%. Platforms such as OKX, Bybit and KuCoin publish PoRs every month, allowing users to check their reserves to ensure they are creditworthy.
WazirX, first PoR after a cyberattack
Although proof of reserves reporting has improved transparency on major exchanges, security concerns remain. WazirX, for example, recently released its first PoR report after a cyberattack in July, revealing a sharp decline in its reserves and highlighting the continued risks facing exchanges.
The report states that WazirX’s total assets, including on-chain funds, assets held with third-party exchanges, and less liquid holdings, are valued at $298.17 million. The asset reduction aligns with the company’s ongoing restructuring following the July cyberattack that resulted in the theft of more than $230 million.
As such, WazirX’s PoR provided essential information about its financial health by verifying that its assets cover its liabilities. By tracking the evolution of an exchange’s reserves, PoR reports help users and stakeholders assess an exchange’s ability to manage funds responsibly and respond to crises.
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