On Tuesday, amid the many conversations concerning crypto exchange proof-of-reserves, Kraken executive Jesse Powell shared a screenshot of coinmarketcap.com’s newly launched proof-of-reserves (POR) dashboard. Powell said he planned to be “more assertive with calling out problems,” and he stressed that a POR audit “requires cryptographic proof of client balances and wallet control.”
Jesse Powell Stresses a ‘Proof of Reserves Audit Requires Cryptographic Proof of Client Balances and Wallet Control’
Kraken’s Jesse Powell has had a lot to say about the recent FTX collapse, as the exchange executive recently said the trading platform’s fallout was “a massive setback.” Powell has also been talking about the subject of proof-of-reserves (POR) in recent times as Kraken has been a member of Nic Carter’s proof-of-reserves list or “Wall of Fame” for quite some time. Kraken is noted to have “Full POR” and its described as “auditor-assisted, user validation with Merkle approach, point in time.”
Just recently, the crypto coin price aggregation website coinmarketcap.com (CMC) announced the launch of a proof-of-reserves dashboard, and Binance CEO Changpeng Zhao (CZ) tweeted about the CMC POR dashboard. “@Coinmarketcap released a new exchange reserve dashboard feature,” CZ said on Nov. 22. The same day, Kraken executive Jesse Powell tweeted about the new CMC feature.
“I said I was going to be more assertive with calling out problems. This is one of them,” Powell said. “‘Reserves’ = assets minus liabilities. ‘Reserves’ != list of wallets,” the Kraken executive explained. Powell added:
The Proof of Reserves AUDIT requires cryptographic proof of client balances and wallet control. #Proofofreserves audit must have: 1. sum of client liabilities (auditor must exclude negative balances). 2. user-verifiable cryptographic proof that each account was included in the sum. 3. signatures proving that the custodian has control of the wallets.
Paper Shows Full POR Is Easily Achievable, But Will Crypto Exchange Bosses Keep Their Merkle-Proof Audit Promises?
The POR topic comes at a time when the crypto community is on edge and exchanges have promised to share POR audits with Merkle proof. A handful of exchanges have shared lists of addresses and the analytics firm Nansen has published a dashboard of exchange wallets as well. When Powell shared his sentiment on Twitter, he also shared an archive.org link to a paper called…
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