As we have noted, the trend of cryptocurrency exchanges publishing reserves is not accidental. This is how centralised trading platforms are trying to regain the user trust that was lost after the collapse of FTX.

Still, as it turned out in autumn, the platform's management was using its users' funds for their personal needs. For instance, the FTX founder had been transferring money to the accounts of the trading company Alameda Research, and then using it to donate to officials, buy real estate, and fund the trading operations of his colleagues at Alameda.


As a result, much of the FTX users’ funds were missing from the right wallets. So when they began withdrawing coins en masse, the exchange ran out of money. This led to the suspension of withdrawals and further bankruptcy of the platform along with the arrest of its management.

FTX founder Sam Bankman-Fried

Accordingly, the challenge now for the remaining players in the market is to prove to users that their money is in place and not being misused. Accordingly, if crypto-assets are actively withdrawn, there will be no impact on the solvency of exchanges.

How to choose a cryptocurrency exchange?

In his analysis, Carter used parameters such as proof of assets, disclosure of liabilities, engagement of a third-party auditor, number of assets with proof of reserves and facilitation of any procedures that could help disclose the financial health of the exchange.

Features of proving reserves of the exchanges in question

Kraken and BitMEX received the most credit according to the survey results. According to Carter, Kraken Exchange enlisted the services of auditor Armanino to prove reserves and gives customers a “good level of assurance” that there are no hidden liabilities. Carter also praised the trading platform’s commitment to publishing proof of reserves every six months.

Why publishing reserves every six months is a good thing is difficult to understand. Ideally trading platforms should be transparent at all times. Well, six months is too long a time span during which anything can happen.

But BitMEX, which also received high marks, didn’t rely on the auditor and chose a different model. The exchange listed all the BTC balances in its possession and evidence that they could be spent using cryptocurrency wallet keys in the hands of management. As for liabilities, the company has published cryptographic proof of user balances.

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According to Cointelegraph’s sources, major trading platform Binance, which was one of the first to publish information about its reserves, has raised some doubts for Carter.

The exchange’s relatively low score is due to the fact that its reserve proof system is incomplete and only applies to Bitcoin so far. Here’s a relevant quote from the expert.

The first publication of reserves from Binance does not offer firm guarantees. It only covers Bitcoin, which is only 16.5 percent of the platform’s customer assets.

It should be noted that in the first half of November, the Binance exchange published a list of its own wallets that it owns. It listed USDC, USDT and BUSD addresses, among others, and the amounts were huge.

Ranking of cryptocurrency exchanges’ reserve proof systems

While each of the exchange’s clients can check whether the exchange has the ability to meet their withdrawal requests, Binance representatives have not yet published information on the company’s commitments, which in principle is the case for many trading platforms. This makes it difficult for a third party to check the financial stability of the exchange.

It should be noted that Carter did not take cryptocurrency exchange WOO X into account in his analysis, a representative of which we spoke to the day before. The platform's trick is to publish both reserves and liabilities with their detailed classification. In addition, some of this information can be confirmed on the blockchain by anyone, and the data is updated every fifteen minutes.

Allocation of reserves on the WOO X cryptocurrency exchange


We believe that the imperfection of the system for proving own reserves is due to the relative newness of this area. Still, exchanges realised the need to disclose their holdings about a month and a half ago, which is a small enough interval to create such an important and large-scale platform. So here we can assume that, over time, there will be no question about the reserves of trading platforms. And ideally they should not arise in relation to the liabilities of exchanges either.