Binance reserve proof is 'useless without liabilities': Kraken CEO
According to Powell, a full proof of reserve audit should include the sum of the customer's liabilities, user-verifiable cryptographic evidence that each account has been included in the sum and signatures proving the depositary's control over the portfolios.
New
Disclaimer: Article has been updated to reflect Binance CEO CZ's response to concerns raised by Kraken CEO Jesse Powell.< /em>
The collapse of crypto exchange FTX has revealed the importance of proof of reserves to avoid situations involving embezzlement of user funds. As exchanges began to proactively share wallet addresses to prove the existence of user funds, several entrepreneurs, including Kraken CEO and co-founder Jesse Powell, called the practice "unnecessary" because trades do not include liabilities.
According to Powell, a full proof of reserve audit should include the sum of the client's liabilities, user-verifiable cryptographic evidence that each account was included in the sum, and signatures proving the custodian's control over the wallets . While Kraken's Reserve Proof helps verify assets against company liabilities, Powell continues to call out other players who failed to include accounts with negative balances.
I'm sorry but no. It's not PoR. This is either ignorance or intentional misrepresentation.
The Merkle tree is just bullshit with no auditor to make sure you don't include accounts with negative balances. The state of the asset is useless without a liability. https://t.co/b5KSr2XKLB
— Jesse Powell (@jespow) November 25, 2022Powell has called out CoinMarketCap in the past for sharing incomplete proof of reserves because it lacked "cryptographic proof of customer balances and wallet control." He reiterated that reserves are not the list of portfolios but assets minus liabilities.
Binance's recently released Proof of Reserve system allows users to verify their...
According to Powell, a full proof of reserve audit should include the sum of the customer's liabilities, user-verifiable cryptographic evidence that each account has been included in the sum and signatures proving the depositary's control over the portfolios.
New
Disclaimer: Article has been updated to reflect Binance CEO CZ's response to concerns raised by Kraken CEO Jesse Powell.< /em>
The collapse of crypto exchange FTX has revealed the importance of proof of reserves to avoid situations involving embezzlement of user funds. As exchanges began to proactively share wallet addresses to prove the existence of user funds, several entrepreneurs, including Kraken CEO and co-founder Jesse Powell, called the practice "unnecessary" because trades do not include liabilities.
According to Powell, a full proof of reserve audit should include the sum of the client's liabilities, user-verifiable cryptographic evidence that each account was included in the sum, and signatures proving the custodian's control over the wallets . While Kraken's Reserve Proof helps verify assets against company liabilities, Powell continues to call out other players who failed to include accounts with negative balances.
I'm sorry but no. It's not PoR. This is either ignorance or intentional misrepresentation.
The Merkle tree is just bullshit with no auditor to make sure you don't include accounts with negative balances. The state of the asset is useless without a liability. https://t.co/b5KSr2XKLB
— Jesse Powell (@jespow) November 25, 2022Powell has called out CoinMarketCap in the past for sharing incomplete proof of reserves because it lacked "cryptographic proof of customer balances and wallet control." He reiterated that reserves are not the list of portfolios but assets minus liabilities.
Binance's recently released Proof of Reserve system allows users to verify their...
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