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Proof of reserves != proof of liabilities. Proof today != proof tomorrow.
> Proof of reserves today != proof of reserves tomorrow.
You should be able to detect large outflows/inflows from/to their wallets and demand an explanation.
Why doesn't Binance flex and encourage a complete withdrawal by say Jan 1? Wouldn't that kind of power move boost its reputation above all competitors?
FTX was also audited by a top firm, Armanino!Changed nothing... In the article says: Following the collapse of FTX, Paul MacIntosh, EY’s US financial services crypto co-leader, said on LinkedIn that proof of reserves reports do not assess companies’ internal controls, “which ultimately was the downfall of FTX”.
Exactly. And people act like this is a problem with cryptcurrency, but it's really a problem with people in corporations behaving badly.
Cryptocurrency is designed for, and has a major selling point, that it makes it easier for people to get away with actions which are socially considered bad and evade controls designed to detect, prevent, and reverse such actions.
To the extent that design works, it doesn't just protect the benign little-guy against malign authorities.
What a misleading title > However, the accounting firm said on Friday that it had “paused its activity relating to the provision of proof of reserves reports for entities in the cryptocurrency sector due to concerns regarding the way these reports are understood by the public”. According to communications seen by the Financial Times, the level of media focus on the matter was also a factor in Mazars’ decision ... Maz…
Except there was no audit, only an attestation. Outflows are as good as they were for FTX - if there is no 100% coverage of customer deposits.
FTX was also audited by a top firm, Armanino!Changed nothing... In the article says: Following the collapse of FTX, Paul MacIntosh, EY’s US financial services crypto co-leader, said on LinkedIn that proof of reserves reports do not assess companies’ internal controls, “which ultimately was the downfall of FTX”.
Exactly. And people act like this is a problem with cryptcurrency, but it's really a problem with people in corporations behaving badly.
Proof of reserves != proof of liabilities. Proof today != proof tomorrow.
An exchange can borrow loads of assets, have an "attestation" that the assets are in their accounts, then pay them back.
FTX was also audited by a top firm, Armanino!Changed nothing... In the article says: Following the collapse of FTX, Paul MacIntosh, EY’s US financial services crypto co-leader, said on LinkedIn that proof of reserves reports do not assess companies’ internal controls, “which ultimately was the downfall of FTX”.
Exactly. And people act like this is a problem with cryptcurrency, but it's really a problem with people in corporations behaving badly.
Proof of reserves != proof of liabilities. Proof today != proof tomorrow.
The proof of reserves can be done in such a way that each user can verify that their balance is backed: https://www.kraken.com/proof-of-reserves > Proof of reserves today != proof of reserves tomorrow. You should be able to detect large outflows/inflows from/to their wallets and demand an explanation.
Why doesn't Binance flex and encourage a complete withdrawal by say Jan 1? Wouldn't that kind of power move boost its reputation above all competitors?
Chances are they'll be dead if enough people act on that. So they're doing the opposite: reassuring people that everything is fine. If there is one common element that precedes every bank run and run on crypto exchanges and such then it is the 'everything is fine' phase just prior to the implosion.
1. For a bank run on an actual bank, it is known that a bank doesn't keep all your assets on hand - they are loaned out, which is (largely) what allows you to earn interest. So it is known that if everyone tries to withdraw at the same time that there won't be enough money.
2. For an exchange/brokerage, your money/assets are explicitly NOT supposed to be lent out without your permission. So, in theory, if everyone asked for their assets all at once, the assets should be there.