Crypto Exchanges Agree to Provide Proof-of-Reserve Following FTX Crisis
- CEO Changpeng Zhao pledged on Tuesday to implement a Proof-of-Reserve mechanism at Binance to provide full transparency, and called on all industry players to follow suit.
- KuCoin, Poloniex, Huobi, and OKX were among the first crypto exchanges that promised to publish proof of their reserve holdings within a month.
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Several of the largest crypto exchanges on the market have assured users they will soon publish proof of their fund reserves as fears of insolvency grew after the liquidity crisis of FTX.
The trend was started by Binance CEO Changpeng “CZ” Zhao, who on 8 November pledged to implement a Proof-of-Reserve mechanism in order to increase Binance’s transparency, and allow users to verify the exchange’s digital asset holdings. CZ also urged other industry players to follow suit and increase their transparency through the use of Merkle Tree reserve certificates.
Merkle Tree is a data structure used to encode blockchain data in a more secure and efficient way, and can be used by centralized exchanges to store each user’s asset information in a “leaf” node on the Merkle Tree. A third party can then audit the assets in the leaf nodes, verifying that all user holdings are present.
Cryptocurrency exchange Kraken — which implemented an “advanced cryptographic accounting procedure” back in February, enabling users to verify their assets — echoed CZ’s statement. OKX also stressed the importance of an “auditable merkle tree proof-of-reserve” via Twitter, noting that theirs will be published within 30 days. KuCoin also stated that this is a priority for them, and that their Merkle Tree proof-of-reserve will also be completed within a month. Justin Sun noted that Poloniex and Huobi “both have done it before”, and that Huobi was ready to conduct “a third” Merkle tree reserve test.
- The New York Jurors took 4 fours of deliberating before pronouncing the former FTX CEO guilty of all seven charges of fraud and conspiracy to commit fraud.
- Bankman-Fried will now have to appear in court on 28 March, 2024, where he will face a potential maximum sentence of 115 years in prison.
Former CEO of FTX Sam Bankman-Fried leaves the Federal Court in New York after pleading not guilty, 3 January, 2022.
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- A little over $13 million in altcoins were sent to crypto exchanges Binance and Coinbase in the past 24 hours, which is in accordance with a September court order.
- The court ordered a phased liquidation process, which allows the bankruptcy estate to sell $3.4 billion worth of digital assets over a certain period of time.
- Joseph Pimbley, a member of litigation consulting firm PF2 Securities, will try to rebuff testimonies from Caroline Ellison, Gary Wang, Nishad Singh, and Adam Yedidia.
- During his testimony Pimbley will try to establish a timeline for the FTX-Alameda line of credit, and convince the jury it fluctuated between $1 billion and $3 billion between 2021 and 2022.