FTX collapse caught the attention of the whole world, but mainly cryptocurrency exchanges. FTX was one of the largest crypto exchanges but crashed just within few days. Now, many exchanges work on proving this won’t happen to them.
Binance was the first to openly disclose its reserves, which are made out of Bitcoin, Ethereum, Binance Coin, and several stablecoins, worth around $70 billion. Kraken, Gate, Coinbase, Bitfinex and other biggest crypto exchanges follow Binance’s initiative.
More transparency and safety are required
Traders who short everything in 2022 be celebrating like 🐻 pic.twitter.com/P6uvV2e1PL
— Investro.com (@investrocom) November 13, 2022
The only way to prove customers’ trust nowadays as an exchange will be through an audit that will include the company’s reserves along with liabilities. Safety has been the priority number one since crypto companies started collapsing like a domino.
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Exchanges will be required to disclose Merkle tree liabilities and proof of reserves. This means showing data in a clear way that looks like a tree. According to blockchaincenter, Kraken, Coinbase and Gate are the first crypto exchanges to complete an audit while providing proof of reserve.
Binance, Crypto.com, Bitfinex, and Huobi also provided proof of reserve, but an audit is still underway. Hopefully, all these huge crypto exchanges will show they are bullet-proof like Binance, and FTX was the last domino.
Other major industry players like OKX, KuCoin, MEXC, and ByBit are also working on disclosing their proof of reserves along with liabilities while being audited. For instance, Bitfinex showed it has 204,338.17 bitcoins and 1,225,600 ETH, which makes Bitfinex one of the largest BTC and ETH holders.
KuCoin and OKX joined the proof of reserves run, disclosing billions of dollars in reserves. Moreover, Kris Marszalek, Crypto.com CEO, revealed the company has a strong balance sheet and minimal exposure to FTX.
“While the Proof of Reserves audit preparation is underway, we are sharing our cold wallet addresses for some of the top assets on our platform. This represents only a portion of our reserves: about 53,024 BTC, 391,564 ETH, and combined with other assets for a total of ~US$ 3.0b,” Marszalek said.
This is indeed the test of time. One year ago, people working in the crypto space were on the brink of a revolution, cherishing everyone from the industry. Now, fear prevails and many frauds are revealed, causing people to view the industry as one big Ponzi scheme.
Also read: Recession: what is it and how to protect against it?
Crypto exchanges will have to work harder than ever to win users’ trust so everyone will not withdraw their funds. However, this is where decentralized exchanges and crypto wallets like Trust Wallet can gain.
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