Kraken Co-Founder Jess Powell Criticizes Crypto Exchange Initiative Binanza ensure transparency in the storage of user funds.
This is simply «here is a hash of your record in the BTC spreadsheet». ok…but what’s the point? The whole point is to understand if an exchange has more cryptocurrencies in custody than it owes customers. Putting a hash on a row id is worthless without everything else.
— Jesse Powell (@jespow) November 25, 2022
“I’m sorry but there isn’t. This is not a backup test. This is ignorance or willful misrepresentation. Merkle tree without an auditor to make sure you don’t include accounts with negative balances, it’s just nonsense. A statement of activity is meaningless without passivity,” she wrote.
According to Powell, the whole point of Proof-of-Reserves is determining whether a platform has more digital assets than it owes customers.
In response to the criticism, the head of Binance, Changpeng Zhao, promised an audit by the auditors in the future. He also rejected the possibility of including accounts with negative balances and said he was open to questions and revisions.
And absolutely no negative balance involved. It will be verified in the audit for the aforementioned PoR.
Actually the first time I’ve heard of a «negative balance» in a PoR. “Innovative”…
We welcome questions and checks. We build together.
— CZ 🔶 Binance (@cz_binance) November 26, 2022
Formerly Binance announced an update, which will allow bitcoin owners to verify their storage by the exchange. In the future, they plan to extend the initiative to ETH, USDT, USDC, BUSD and BNB holders.
Recall that in early November, Binance disclosed information about their cryptocurrency reserves.
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