How can CEX's prove their solvency? - page 2.

vv181

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There is a context missing in regard to why Mazars have a public concern about their proof of reserve reports to those companies. It is explained as follows:

Quote from: ChillyMatthew on December 23, 2022, 09:10:01 AM

Who is to say that funds cannot be shifted at any time, like SBF did from FTX to Alameda?

Any reports cannot guarantee that. It is the wrong thing to rely on.

Unfortunately, in a cryptocurrency world, handing over one possession to centralized entities is a sure way to make the funds can be shifted without their concern. Not your keys, not your coins. The problem in regard to the current FOMO of exchanges published their proof of reserve is that kind of framework is not enough to attest solvency of exchanges, as already noted above.

cryptoaddictchie

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Quote from: ChillyMatthew on December 23, 2022, 09:10:01 AM

What I dont uderstands is, how can we know which tests will demonstrate the solvency of a centralized crypto exchange? Who is to say that funds cannot be shifted at any time, like SBF did from FTX to Alameda?

Not sure about proving it. But if the exchange says so then they could show and make a way how yo verify this process and investors and users can be able to confirm it. The thing is centralized exchange could did show iy however with their control of thr platform, anything is quite possible. Unless they put it in a decentralized manner.

iv4n

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I guess The Big 4 would do the work. It's how CEX can prove they have what they say they have...

Quote from: zasad@ on December 23, 2022, 09:59:04 AM

To avoid such scams with the FTX exchange, you need to prohibit the exchange from managing client deposits. For this violation 1,000,000 life sentences. I used to be an anarchist too, but today everyone understands that cryptocurrency exchanges should be under the control of regulators.

They don't need to be under the control of regulators, but for sure they need to have some proof of reserves. SBF used the client's deposits for his own projects (reserves were in FTT) and with the collapse of FTT he literally ended up with nothing.

zasad@

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Quote from: ChillyMatthew on December 23, 2022, 09:10:01 AM

GM crypto fam.

So, after the FTX debacle, big exchanges rushed to prove their reserves, and that ended up with Mazars halting all work with crypto firms.

Quote

“Mazars has 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,”

What I dont uderstands is, how can we know which tests will demonstrate the solvency of a centralized crypto exchange? Who is to say that funds cannot be shifted at any time, like SBF did from FTX to Alameda?

Source:

https://app.getresponse.com/view.html?x=a62b&m=BVHuSm&mc=9M&s=BtgXWnG&u=QcLhh&z=ECiRVqJ&

To avoid such scams with the FTX exchange, you need to prohibit the exchange from managing client deposits. For this violation 1,000,000 life sentences. I used to be an anarchist too, but today everyone understands that cryptocurrency exchanges should be under the control of regulators.

ChillyMatthew

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GM crypto fam.

So, after the FTX debacle, big exchanges rushed to prove their reserves, and that ended up with Mazars halting all work with crypto firms.

Quote

“Mazars has 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,”

What I dont uderstands is, how can we know which tests will demonstrate the solvency of a centralized crypto exchange? Who is to say that funds cannot be shifted at any time, like SBF did from FTX to Alameda?

Source:

https://app.getresponse.com/view.html?x=a62b&m=BVHuSm&mc=9M&s=BtgXWnG&u=QcLhh&z=ECiRVqJ&

Topic: How can CEX's prove their solvency? - page 2. (Read 183 times)