Next week, November 6th, will mark the two year anniversary of the FTX exchange collapse. The FTX collapse marked one of the most significant failures in cryptocurrency history, stemming from the exchange's inability to maintain adequate reserves to cover user funds. As such, exchanges need to provide Proof-of-Reserves to the publicly in order for stakeholders to verify they actually hold the users funds.
Out of the top exchanges by total Bitcoin reserves, Coinbase is the only one that doesn't provide a public Proof-of-Reserve (PoR) report. All other major exchanges provide periodic PoR reports with distinct grades of transparency.
For example, Binance provides a comprehensive PoR which include:
1. making on-chain addresses publicly available for anyone to verify the holdings of cryptocurrencies (Proof-of-Assets, PoA).
2. the ability for each user to verify that their account balances are included in the overall calculation of the exchange's liabilities (user deposits).
3. the report includes assets other than Bitcoin and Ethereum, which were the first assets exchanges reported initially. Making addresses publicly available is especially important for market stakeholders to track asset movements and improve industry trust and transparency.
Moreover, Binance's Bitcoin reserves have grown by 28k Bitcoin or 5% since to 611K Bitcoin, even after the exchange experienced regulatory pressure from US authorities in 2023.
Additionally, out of the major exchanges, Binance has seen the lowest reserve drawdowns over time, which has never hit more than 16%.
Since the collapse of the FTX exchange in November of 2022 only Bitfinex and Binance have seen their Bitcoin reserves grow out of the major exchanges.
Written by CQ Research
