Kraken CEO and co-founder Jesse Powell stated that Binance’s proof of reserve would be meaningless without obligations.
The crypto industry has moved into a new dimension after the recent FTX events. FTX, one of the largest cryptocurrency exchanges, went bankrupt after a major collapse. The wreckage he left behind had consequences that were difficult to recover from. Many companies started filing for bankruptcy, citing FTX events. At the same time, the number of projects experiencing problems with withdrawals has also increased. In light of all these processes, Binance has announced its new proof of reserve. However, this move caught the attention of Kraken CEO.
Kraken CEO Jesse Powell Criticizes Binance Reserve Evidence
Jesse Powell, CEO of Kraken exchange, voiced criticism about the Binance proof-of-reserve system. These criticisms were promptly responded to by Binance CEO Changpeng Zhao (CZ).
I'm sorry but no. This is not PoR. This is either ignorance or intentional misrepresentation.
The merkle tree is just hand wavey bullshit without an auditor to make sure you didn't include accounts with negative balances. The statement of assets is pointless without liabilities. https://t.co/b5KSr2XKLB
— Jesse Powell (@jespow) November 25, 2022
Powell stated that such an application would be meaningless as exchanges do not include obligations. According to Powell, it is possible to establish a complete proof-of-reserve system. Kraken CEO spoke of a robust proof-of-reserve system in terms of cryptographic proof of client balances and wallet control.
Powell underlined that the Merkle Tree method would be completely meaningless without an auditor. He stated that this method requires auditing to examine accounts with negative balances.
Responding to these criticisms, Binance CEO CZ stated that there is a plan that includes third-party auditors to audit the proof-of-reserve system.
https://twitter.com/cz_binance/status/1596391586036080641
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