FTX went from one of the cryptocurrency exchanges to filing for bankruptcy within a span of a few days. The crypto world was shocked and disappointed after the crash, and more than 1 million FTX users were in disarray. Though the whole year was not good for the crypto world, this crash triggered more distrust of the users on the exchanges.
There were many reasons for the failure of FTX. However, no proper reserve to back the company is considered the primary cause of the failure. The company had more expenses than the reserve had, but no one knew about it because the company was showing Proof of Reserve to the users. Investors and crypto users started doubting other top exchanges as well.
Top exchanges and their Proof of Reserves
Before discussing how many exchanges have shared their Proof of Reserve, you need to know about the concept of Proof of Reserve. Proof of Reserve is a method in which an exchange, lender, or other custody provider uses Proof of Reserve to certify their solvency and ensure that all user balances are backed 1:1 by exposed assets.
Following are some of the top crypto exchanges that have published their Proof of Reserve.
After the FTX’s failure, CZ was the first one who, on the 8th of November 2022, in a tweet, urged the crypto industry to share a Merkle tree Proof of Reserve with their users to get their trust back. On the 11th of November, Binance becomes the first exchange to provide its provisional Proof of Reserve to its users. This was a great step for other exchanges to follow.
It is the second largest exchange by volume and becomes the second exchange to share how and where they use their funds. The exchange went a bit further, and any user can now check the financials of Coinbase.
Kraken cryptocurrency exchange uniquely shares its Proof of Reserve. It does not share its wallets and balance publicly but allows its users to see whether their funds are safe or not. This can be easily checked through a simple tool, and you can take a snapshot of your audited account.
Gate.io is one of those rare crypto exchanges that always share its Proof of Reserve. It shared its Proof of Reserve back in May 2020 and then in Oct. 2022.
One of the top-running exchanges, Bitfinex, shared its Proof of Reserve on the 11th of November 2022. The reserve shows that the exchange is one of the largest holders of both Bitcoin and Ethereum. Bitfinex also followed the steps of Binance and Coinbase and shared its Proof of Reserve after the FTX crash.
After the FTX crash, there were rumors about Huobi’s insolvency, but soon Huobi exchange shared its full Merkle Tree Proof of Reserve and ensured all the users that their funds were safe with them. Additionally, it ensured the users about their security and promised not to withhold their withdrawals.
Crypto.com has become the latest exchange to share its full Proof of Reserve. It shared its transparency report on the 11th of November and promised to share the Proof of Reserve on the 25th of November 2022, but due to some technical problems, it shared the Proof of Reserve in the second week of December 2022.
Though the exchange has not provided the full Proof of Reserve, it provides the list of all those BTC and Ethereum that the exchange has. However, the exchange is planning to hire an auditor to provide full Proof of Reserve.