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Analyst Compares Centralized Crypto Exchanges

Bitcoin advocate Nic Carter has published an in-depth analysis of centralized exchanges’ proof of reserve. Carter made a ranking of proof-of-reserve data provided by some of the leading exchanges in the cryptocurrency market.

With the collapse of FTX, many investors lost their trust in the exchanges and started transferring their funds to their individual wallets. On top of that, many crypto exchanges have started publishing proof-of-reserve data to regain investor confidence. However, it later became clear that it was not enough for exchanges to simply publish their proof of reserve. In addition to these data, speculations began to circulate that stock markets should also share their liabilities.

Carter, on the other hand, published a report in which the quality of proof of reserve (PoR) of some exchanges was examined in detail. The crypto advocate used parameters such as disclosure of approvals and obligations to assets held in his review, including a third-party auditor, demonstrating credibility by taking a PoR for all assets, and committing procedures to determine which PoRs are of the best quality.

Kraken and BitMEX exchanges took the lead in Carter’s report. According to Carter, Kraken, who works with the Armanino audit firm for proof of reserve, gives its clients a “good level” of confidence by not hiding its obligations. As is known, Kraken has made a commitment to renew this activity every six months, in addition to publishing proof of reserve data. Carter, on the other hand, praised Kraken’s commitment.

BitMEX, which was also praised, preferred to switch to a more transparent model instead of working with any auditing company. The exchange shared all the BTC balances it holds in terms of assets. Besides, the exchange has proven that the mentioned assets are expendable by BitMEX multisig.

On the other hand, while some exchanges received a passing grade from Carter with the proof of reserve data they published, the same was not true for Binance, the world’s largest crypto exchange in terms of trading volume. According to Carter, the exchange’s low PoR score is due to a lack of proof-of-reserve data. However, the crypto advocate noted that despite Binance CEO Changpeng Zhao highlighting the importance of PoRs after the FTX crash, the executive has yet to publish proofs of reserve at the level they should be. Carter also added, “Binance’s initial proof of reserve data is not reassuring. The exchange’s data only covers 16.5 percent of client assets.” said.

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