As FTX, the world's third- largest exchange by volume, files for bankruptcy and halts withdrawals, other exchanges are working hard to assure customers that they won't be the same. The executives of Coinbase are on a media tour telling investors that it's safe to store money with their company.
The moves are meant to assure people that their money isn't being used on other investments. The exchanges want you to know that if you deposit a Bitcoins with them, they will keep it. FTX lent billions of dollars in customer funds to a trading firm that was controlled by the exchange's former CEO. FTX spiraled because of a report that Alameda's biggest asset was FTX's token, FTT.
Brian Armstrong, the CEO of Coinbase, responded to this by saying that his company doesn't lend customer funds and that they always hold customer assets1:1. Funds are available to our customers 24 hours a day, seven days a week, and all year long.
Other exchanges have promised to show proof that they have all the coins customers have deposited. The world's largest exchange put out a news post on Thursday titled "our commitment to transparency," where it shared the addresses of its hot and cold wallet for the digital currency. The post says that the list is not a complete set of data and that it will be audited in the next few weeks.
A dashboard that visualizes the exchange's holdings was created by the company. The data shows that 40 percent of the holdings that the exchange has revealed are comprised of BUSD and BNB.
Changpeng "CZ" Zhao, the CEO of the world's biggest coin exchange, called it "poop journalism" after he posted a picture of what appears to be a paywalled version of the story. He objected to the fact that the outlet called BUSD Binance's "own stable coin" when it was issued by a third party. According to the exchange's website, BUSD is issued "in partnership" with Paxos, which also holds the reserves that keep its value pegged to $1USD.
The reports of how much BUSD and BNB is held appear to be accurate.
The big issue for Changpeng is one that seems to be a problem for other websites. Users decide to store these assets with us. It is implied that it is not like the FTX situation. Users choose which assets they hold based on their trades with the company.
A partial proof of reserve was released on Friday, with promises of a full audit in the coming weeks. The company has a reserve of around $559 million for the former and $481 million for the latter. One commentator told people to immediately pull their money from the exchange if they saw the SHIB reserves.
Kris Marszalek claims that the company has a one-to-one reserve for its customers. If that is true, it would mean that the reason it has more SHIB in its reserves is because its customers have spent more on it than on ether. I don't know who to judge them for.
Salt will be taken with these releases. They are currently un audited and incomplete. On Monday, Bankman-Fried was worth an estimated $15.6 billion, and by Thursday, he had no assets.
The proof of reserves isn't proof of a one-to-one match for what customers have traded, it's proof of what a company has on its books. Data on a company's holdings won't tell you much if you don't know how much the company owes White said that proof of reserves is meaningless without reliable information.
As a publicly traded company, it is possible to see the assets and liabilities. They are not obligated to give out financial reports. The CEO of the company plans to take the company public in a few years.
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