After FTX collapsed, the incident prompted many major crypto exchanges to publish proof-of-reserves and lists of known addresses so users can verify the solvency of the trading platforms. While the veracity of these proof-of-reserve lists and asset dashboards is debatable, they do provide some insight into the large sums of cryptocurrency held in custody by major exchanges. For example, Binance, the largest cryptocurrency exchange by trade volume, manages $66 billion in crypto assets, which is more than 6% of the entire cryptocurrency economy’s net value of $1 trillion.
An Inspection of 5 Proof-of-Reserves Lists That Provide Insight into Large Cryptocurrency Holdings
It has been more than 80 days since Coindesk published a story about Alameda Research’s balance sheet, which showed the quantitative trading desk owned a large amount of ftx token (FTT). Then, on Nov. 6, 2022, Binance CEO Changpeng Zhao (CZ) revealed that his exchange would be selling its FTT holdings. Since then, FTT has lost considerable value and FTX filed for bankruptcy protection five days later on Nov. 11. At that time, and prior to FTX’s failure, it was challenging to monitor the exchange’s reserves as executives kept things very opaque. This situation has led exchanges to release proof-of-reserve lists and there has been criticism from crypto industry members over specific types of lists and how they are audited.
Additionally, Paul Munter, the U.S. Securities and Exchange Commission’s (SEC) acting chief accountant, recently stated that the SEC is closely monitoring proof-of-reserves (POR). Despite the complaints, the available proof-of-reserve lists provide some insight into what entities hold and, to a certain extent, they help improve market stability because people can monitor the holdings. The following is an examination of five different centralized crypto asset exchanges and their holdings in crypto assets as of Jan. 22, 2023, according to nansen.ai’s exchange list. Nansen features a dashboard for 18 different centralized crypto exchange platforms.
Binance is the largest with $66 billion in digital assets held in reserves by the crypto exchange giant. On Jan. 22, the largest crypto exchange by trade volume held 486,427 bitcoin (BTC), worth $11.1 billion. In terms of stablecoins, Binance holds $13.2 billion in tether (USDT) and $13.3 billion in BUSD.
Additionally, Binance holds 4.7 million ether, worth $7.6…