Kraken co-founder Jess Powell criticized the initiative of the cryptocurrency exchange Binance to ensure transparency in the storage of user funds.
This is simply «here’s a hash of your record in the BTC spreadsheet». ok… but what’s the point? The whole point of this is to understand whether an exchange has more crypto in its custody than it owes to clients. Putting a hash on a row ID is worthless without everything else.
— Jesse Powell (@jespow) November 25, 2022
“I’m sorry but there is no. This is not Proof-of-Reserves. This is either ignorance or intentional misrepresentation. merkle tree without an auditor to make sure you don’t include accounts with negative balances, that’s just nonsense. A statement of assets is meaningless without liabilities,” he wrote.
According to Powell, the whole point of Proof-of-Reserves is to determine whether a platform has more digital assets than it owes to customers.
In response to criticism, the head of Binance, Changpeng Zhao, promised an audit by auditors in the future. He also rejected the possibility of including accounts with negative balances and stated that he was open to questions and reviews.
And absolutely no negative balances involved. It will be verified in the audit for the above PoR.
Actually the first time I heard about a «negative balance» in a PoR. «Innovative»…
We welcome questions and checks. Let’s build together.
— CZ ???? Binance (@cz_binance) November 26, 2022
Formerly Binance announced an update, which will allow the owners of bitcoins to verify their storage by the exchange. In the future, they plan to expand the initiative to holders of ETH, USDT, USDC, BUSD and BNB.
Recall that in early November, Binance disclosed information about their cryptocurrency reserves.
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