Kraken CEO Jesse Powell, recently announced by Binance, “Proof of Reserve (Proof-of-Reserve)” approach. According to the CEO, the approach in question has no basis.
Binance, recently announced that it will offer “Proof of Reserve” to prove its users are safe. Announcing all of its reserves after the said announcement, Binance invited other exchanges to the same action. Kraken CEO Jesser Powell criticized the approach very harshly. According to the CEO, the “proof of reserve” approach lacks such detail as “proof of liability”.
As Koinfinans.com reported, the details that emerged after the collapse of the FTX stock market were frightening. According to the said bankruptcy documents FTXused clients’ assets in a risky way. This detail forced other exchanges to be more transparent.
Binance Starts Offering Proof of Reserves
Binance was the first exchange to use a mechanism to prove its reserves. Other exchanges soon began to implement the move in question. However, the ‘proof of reserve’ in question consists of the discovery of cold wallets for many exchanges.
However, Binance has finally presented its cryptographic proof, the “Merkle Tree for Proof of Reserves”. Binance wants to lead the industry with this move. Kraken CEO, on the other hand, thinks that this approach makes no sense.
“Sorry but no! This is not a proof of reserve. This is an intentional or involuntary misrepresentation.”
According to Kraken CEO, there is only one way to solve this problem. This path will emerge by figuring out whether the stock market has more assets than it owes to its customers.
I’m sorry but no. This is not PoR. This is either ignorance or intentional misrepresentation.
The merkle tree is just hand wavey bullshit without an auditor to make sure you didn’t include accounts with negative balances. The statement of assets is pointless without assets. https://t.co/b5KSr2XKLB
— Jesse Powell (@jespow) November 25, 2022
CZ Responded to These Allegations
Jesse Powell’s claims did not go unnoticed by the Binance CEO. CEO says it’s good for exchanges to point directly at each other thinks. According to the CEO, these criticisms are critical to the development of the crypto industry.
In crypto:
Brian A and Jesse P say FTX is an “overseas exchange” problem, even though SBF is American.
I tweeted questions about Coinbase/Grayscale. Brian answered it.
Jesse questions Binance’s Proof-of-Reserves today. We will answer it.
I view these as healthy checks.
— CZ 🔶 Binance (@cz_binance) November 25, 2022
While making its reserves public, Binance initially bitcoin announced that it will start with assets and will add support for other assets and networks in the coming weeks. Zhao also noted that the inclusion of third-party auditors is currently in the process.
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Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.