This week, two cryptocurrency exchanges provided evidence of reserves to emphasize that the trading platforms back client assets 1:1. Binance released its report on December 7, 2022 detailing that global auditor Mazars Group conducted the audit. On December 9, 2022, the exchange Crypto.com published proof of reserves and the verification was also performed by Mazars.
Binance and Crypto.com Reveal POR Audits
Two very large crypto exchanges this week provided proof-of-reserves (POR) documentation following the promises made by exchange executives following the FTX fiasco. The world’s largest crypto exchange, in terms of trading volume, Binance, unveiled a comprehensive overview of assets such as BTC, BTCB and BBTC hosted on Mazars Group’s website, showing assets held on Bitcoin, Ethereum, BNB and Binance Smart Chain networks.
The audit by Mazars took place on November 22, 2022, at Bitcoin block height 764,327, and the report claims that assets are 101% backed by collateral reserves. “At the time of the review, Mazars found that Binance had controlled in-scope assets for more than 100% of their total platform liabilities,” the Mazars report states. “The collateral ratio takes into account in-range assets that are lent through the margin and loan supply backed by out-of-range assets. The Merkle Root is constructed by hashing all customer accounts into a single output,” adds the Mazars audit.
Mazars’ audit of Binance further notes that “total liabilities” were accounted for in the statement. In late November 2022, after Binance provided POR addresses, Jesse took Powell from Kraken criticized the evidence and said that the “state of assets is meaningless without liabilities”. Powell also shared his two cents on Binance’s latest audit and castigated the Binance POR again on December 8.
After Binance released its POR audit reviewed by Mazars Group, crypto trading platform Crypto.com released a press release about its POR audit, which was also conducted by Mazars. “Mazars Group compared the assets owned [onchain] addresses proven to be controlled by Crypto.com with customer balances through an auditor-controlled live query of a production database as of December 7, 2022, 00:00:00 UTC,” the company said.
Crypto.com indicated that existing customers can verify their assets on the platform. The full Crypto.com audit conducted by Mazars can be found here. “Our report is solely to provide Crypto.com clients with additional transparency and reassurance that their in-scope assets are fully reserved, exist on the blockchain(s) and are under the control of Crypto.com at the reporting date below’, the control data from Mazars.
What do you think of Binance and Crypto.com releasing POR and audits performed by Mazars Group? Let us know what you think about this topic in the comments section below.
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