In what appears to be the new trajectory amid the downfall of giant crypto exchange FTX, Crypto.com has become the latest exchange to promise its customers that it will publish an audited Proof of Reserves (PoR).
“We share the belief that it should be necessary for crypto platforms to publicly share proof of reserves and Crypto.com will be publishing our audited proof of reserves,” CEO Kris Marszalek tweeted earlier today.
According to Kris, the decision was reached to assure the customers of their asset’s safety and “to send a strong message to the world that there are trustworthy crypto platforms.”
“This is a critical moment for the entire industry. Transparency is more important than ever, and the safety and security of users and funds remain the priority. It requires full and collective commitment,” Marszalek added.
The executive’s comments come after the exchange halted all deposits and withdrawals for the USDT and USDC on the Solana network on November 9. Although the email notifying users about the freeze failed to give reasons, it stated that the freeze would take place immediately. This sent SOL plunging over 40% due to its alleged association with Sam Bankman-Fried, the founder of crypto exchange FTX and crypto-focused hedge fund Alameda Research.
On November 8, Binance CEO Changpeng Zhao (CZ) stated that all crypto exchanges should conduct Merkel-tree proof of reserves. At the time, he noted that crypto exchanges should avoid running on fractional reserves like banks, promising that Binance would start to do proof-of-reserves soon to ensure “full transparency.”
For context, under the proof of reserve, an independent third party usually conducts an audit to ensure that assets are intact and stored as claimed. Although CZ plans on implementing a similar mechanism, he wants to improve it using Merkel Trees. This advanced data structuring method enables data to be processed more efficiently and stored securely on the blockchain.
Today, Binance published a provisional document sharing details of its hot and cold wallet addresses while it works to create and share a Merkle tree PoR in the next few weeks.
As per the blog, the exchange stated that its objective was “to allow users of our platform to be aware and make informed decisions that are aligned with their financial goals.”