{"id":516215,"date":"2022-11-26T08:11:26","date_gmt":"2022-11-26T05:11:26","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/binance-proof-of-reserves-is-pointless-without-liabilities-kraken-ceo\/"},"modified":"2022-11-26T08:11:26","modified_gmt":"2022-11-26T05:11:26","slug":"binance-proof-of-reserves-is-pointless-without-liabilities-kraken-ceo","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/binance-proof-of-reserves-is-pointless-without-liabilities-kraken-ceo\/","title":{"rendered":"# Binance proof-of-reserves is &#8216;pointless without liabilities&#8217;: Kraken CEO"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a35c4c55c09e\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a35c4c55c09e\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/binance-proof-of-reserves-is-pointless-without-liabilities-kraken-ceo\/#%E2%80%9D_Binance_proof-of-reserves_is_%E2%80%98pointless_without_liabilities_Kraken_CEO_%E2%80%9C\" >&#8221; Binance proof-of-reserves is &#8216;pointless without liabilities&#8217;: Kraken CEO &#8220;<\/a><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_Binance_proof-of-reserves_is_%E2%80%98pointless_without_liabilities_Kraken_CEO_%E2%80%9C\"><\/span>&#8221; Binance proof-of-reserves is &#8216;pointless without liabilities&#8217;: Kraken CEO &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMTEvOWZkZjk5NGEtYmRmZi00OTAwLWI4ZGQtODI0OWRiZjkzMDE4LmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-5129e2ea>The collapse of the crypto exchange FTX revealed the importance of proof-of-reserves in avoiding situations involving the mis<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ropriation of users\u2019 funds. While exchanges have proactively started sharing wallet addresses to prove the existence of users\u2019 funds, several entrepreneurs, including Kraken CEO and co-founder Jesse Powell, called the practice \u201cpointless\u201d as exchanges fail to include liabilities.<\/p>\n<p>According to Powell, a complete proof-of-reserve audit must include the sum of client liabilities, user-verifiable cryptographic proof that each account was included in the sum and signatures proving the custodian\u2019s control over the wallets. While Kraken\u2019s proof-of-reserve does allow verification of assets against the company\u2019s liabilities, Powell continues to call out other players that have missed out on including accounts with negative balances.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">I&#8217;m sorry but no. This is not PoR. This is either ignorance or intentional misrepresentation.<\/p>\n<p>The merkle tree is just hand wavey bullshit without an auditor to make sure you didn&#8217;t include accounts with negative balances. The statement of assets is pointless without liabilities. <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/t.co\/b5KSr2XKLB\">https:\/\/t.co\/b5KSr2XKLB<\/a><\/p>\n<p>\u2014 Jesse Powell (@jespow) <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/jespow\/status\/1596227031637045248?ref_src=twsrc%5Etfw\">November 25, 2022<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>Powell called out CoinMarketCap in the past for sharing an incomplete proof-of-reserves as it lacked \u201ccryptographic proof of client balances and wallet control.\u201d He reiterated that reserves are not the list of wallets but assets minus liabilities. <\/p>\n<p>Binance\u2019s recently released proof-of-reserves system allows users to verify their assets using a Merkle tree. However, Powell shared his displeasure as the system failed to include accounts with negative balances, stating that:<\/p>\n<blockquote><p>\u201cThe whole point of this is to understand whether an exchange has more crypto in its custody than it owes to clients. Putting a hash on a row ID is worthless without everything else.\u201d<\/p><\/blockquote>\n<p>Moreover, he asked the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a> and journalists to refrain from \u201coverselling it and misleading consumers.\u201d Instead, he recommended they take the time to understand the motive behind proof-of-reserves.<\/p>\n<p>On the other hand, few community members refuted Powell\u2019s need for a trusted auditor.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Crypto exchange Kraken freezes accounts related to FTX and Alameda<\/em><\/strong><\/p>\n<p>On Nov. 19, Binance CEO Changpeng Zhao confirmed to have started working on building a safe centralized exchange (CEX),\u00a0 idea put forth by Ethereum co-founder Vitalik Buterin.<\/p>\n<p>In this instance, the best-case scenario would be building a system that does not allow crypto exchanges to withdraw a depositor\u2019s funds without consent.<\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/binance-proof-of-reserves-is-pointless-without-liabilities-kraken-ceo\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; Binance proof-of-reserves is &#8216;pointless without liabilities&#8217;: Kraken CEO &#8220; The collapse of the crypto exchange FTX revealed the importance of proof-of-reserves in avoiding situations involving the misappropriation of users\u2019 funds. While exchanges have proactively started sharing wallet addresses to prove the existence of users\u2019 funds, several entrepreneurs, including Kraken CEO and co-founder Jesse Powell,&#8230;<\/p>\n","protected":false},"author":1,"featured_media":516216,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMTEvOWZkZjk5NGEtYmRmZi00OTAwLWI4ZGQtODI0OWRiZjkzMDE4LmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[75014,74894,77672,96217,75540,117],"class_list":["post-516215","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-binance","tag-blockchain","tag-changpeng-zhao","tag-jesse-powell","tag-kraken","tag-business"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/516215","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=516215"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/516215\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/516216"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=516215"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=516215"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=516215"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}