On the 29th of December, in a blog post, Nic Carter, a Bitcoin advocate, shared an in-depth analysis of centralized exchange proof-of-reserves. In the blog post, Nick also ranked the attestations provided by some of the most prominent crypto trading platforms in the industry.
In the blog post, Nick shared a detailed examination of the quality of several exchanges’ proof-of-reserves, also known as PoR. For correct examination, the Bitcoin advocate used several parameters, such as attestation to assets held and a disclosure of liabilities, demonstrating credibility by taking a PoR for all assets and incorporating a third-party auditor. Nick also committed to an ongoing procedure to decide which PoRs are of the best quality.
The crypto exchange platforms that topped this list are Kraken and BitMEX. According to Nick, cryptocurrency exchange Kraken, which employed Armanino for its proof-of-reserves, provides customers with a good level of confidence that there are no hidden liabilities. In the blog post, Nick also praised the crypto trading platform’s commitment to doing PoRs every six months.
While Nick also praised the other cryptocurrency exchange BitMEX, which listed all BTC balances held by the exchange and proof that they are spendable by its multisig. With its liabilities, BitMEX published the full Merkle tree of user balances. According to Nick, this means that there are no issues with excluded or negative balances since anyone can vet the liability set in full.
However, some high-profile in terms of PoR scores, such as the world’s largest cryptocurrency exchange by trading volume, Binance PoR did not do well on Nick’s rankings. Regarding the reason behind Binance’s low PoR score, Nick wrote that its PoR is incomplete. Regarding Binance’s CEO, Changpeng Zhao, who has been highlighting the importance of PoRs after the FTX collapse, Nick believes that the executive hasn’t yet risen to his challenge.