Crypto.com Crypto Exchange Provides Proof of Reserves After Panic by Investors – Here’s What You Need to Know

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Ruholamin Haqshanas

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Ruholamin Haqshanas

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Ruholamin Haqshanas is a contributing crypto writer for CryptoNews. He is a crypto and finance journalist with over four years of experience. Ruholamin has been featured in several high-profile crypto...

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June 26, 2023 06:55 EDT

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Crypto.com has become the latest cryptocurrency exchange to release its Proof of Reserves data from auditing firm Mazars Group, proving that its clients’ assets are fully backed one-to-one.

According to a Friday blog post, auditing firm Mazars conducted the verification process, revealing that the exchange’s bitcoin reserves have a 102% collateralization ratio, its Ethereum reserves a 101% collateralization ratio, and its USDC and USDT reserves a 102% and 106% collateralization ratio. 

“This independent third-party audited report performed under ISRS 4400 as set forth by the International Auditing and Assurance Standards Board (IAASB) used advanced cryptographic procedures to confirm the availability and backing of our customer balances,” Crypto.com said.

A Proof of Reserves (PoR) is an independent check conducted on centralized crypto exchanges by third parties. The goal is to make sure those platforms hold the assets they claim on behalf of their clients.

The audit comes as it was revealed in mid-November that Crypto.com mistakenly sent 320,000 ETH to a wallet address linked to Gate.io. While the exchange claims it has recovered the assets, it somehow impacted the credibility of the platform.

“Providing audited Proof of Reserves is an important step for the entire industry to increase transparency and begin the process of restoring trust,” said Kris Marszalek, CEO of Crypto.com. “Crypto.com is fully committed to providing customers around the world a safe, secure, and compliant means of engaging with digital currencies.”

As reported, Binance, the world’s largest cryptocurrency exchange, also shared its Proof of Reserves report. Audited by Mazars, the report revealed that Binance’s bitcoin reserves have a 101% collateralization ratio.

Other crypto platforms that have completed their Proof of Reserves audits include Kraken, Bitmex, Coinfloor, Gate.io, and HBTC, according to data accumulated by Nic Carter, a partner at Castle Island Ventures and the cofounder of blockchain data aggregator Coinmetrics.io.

It is worth noting that some industry veterans have argued that Proof of Reserves alone is not enough. That is because this practice does not reveal the overall balance sheet and the liabilities of a platform, which makes it hard for users to thoroughly verify the financial health of a company.

“Proof of Reserves is a good start, but it needs to be coupled with Proof of Liabilities in order to be useful,” said Ava Labs CEO Emin Gün Sirer. In other words, crypto platforms could simply borrow funds for a short term to complete their PoR.