OKX to Publish Proof-of-Reserves Every Month, Unveils Self-Verification Feature

• OKX published its second Proof-of-Reserve today and will continue publishing it monthly.
• The firm’s Merkle tree PoR initiative covers three major assets: BTC, ETH, and USDT.
• OKX also launched new features to assist users in verifying the results of PoR.
• FTX collapse prompted cryptocurrency exchanges to reveal Proof-of-Reserve.
• The SEC recently warned investors not to trust exchanges’ claims of PoR.

As part of its effort towards transparency, OKX has published its second Proof-of-Reserve today. As revealed, the cryptocurrency exchange vowed to keep publishing its PoR every month.

According to the audit result, OKX disclosed that it has always maintained a 1:1 customer-fund ratio reserve. The cryptocurrency exchange added that its Merkle tree PoR initiative covers three major assets: BTC, ETH, and USDT. Consequently, the firm said it has a reserve ratio of BTC 101%, ETH 103%, and USDT 101%. 

Additionally, OKX launched new features that will aid users in verifying the results of the two PoR and allows users to download files that contain new historical data relating to the PoR. The firm used open-source tools for the self-verification process. 

Meanwhile, the CMO of the crypto exchange, Haider Rafique, said the monthly publishing of PoR will consolidate OKX’s commitment to be a trailblazer regarding trust and transparency.

CEX’s Move to Improve Transparency

The collapse of FTX ushered in an era of revealing Proof-of-Reserve by cryptocurrency exchanges. Since the collapse of the crypto exchange, investors have become wary of using centralized exchanges (CEX). In a bid to regain their trust, CEXs began to release their PoR, an exercise OKX had just participated in.

“Proof of Reserves” is an audit report that proves that centralized exchanges hold the assets they say they do on behalf of their users.

The subject gained more attention as Binance declared security firm Mazars’ audit on its reserves. However, some financial experts weren’t pleased as they claimed that the report only covered a small part of Binance’s activities.

Recently, auditing firm Mazars deleted the website hosting Binance, Crypto.com, and KuCoin PoR, citing “concerns regarding the way these reports are understood by the public.”

SEC’s Warning on Trusting PoR

With the increasing PoR trend, the acting chief accountant of the United States Security and Exchange Commission (SEC), Paul Munter, warned investors about trusting PoR claims by cryptocurrency exchanges.

However, the senior official argued that PoR doesn’t directly imply that the crypto firms are not in a balanced financial position. 

In that regard, Munter urged investors not to register too much trust in the publication of PoR by crypto firms. In addition, the official said PoR lacks enough information to let stakeholders determine that they have a strong reserve to meet their liabilities.

On the Flipside

• Even though OKX resolved to publish regular PoRs, the Securities and Exchange Commission (SEC) warned investors not to rely too much on them. The SEC also announced its decision to monitor audits issued to crypto companies closely.

Why You Should Care

While PoR is getting some attention after the FTX fallout, regular releases of PoR reserves will surely enhance transparency. However, investors should remember that the reports don’t always provide a transparent picture of crypto firms. 

You may also like:

Mazars Suspends Audits for All Crypto Exchanges in an Accounting U-Turn

Binance Publishes Proof of Reserves Disclosing $69 Billion in Assets