Cryptocurrency exchanges are setting up systems to verify certain assets and liabilities intended to reassure investors and customers in the wake of FTX’s collapse last month, but these measures give limited insight into the companies’ finances.
Several crypto exchanges, including Binance Holdings Ltd. and Crypto.com, in recent months have hired outside auditors to provide a proof of reserves report, an increasingly popular type of attestation that can show the business is solvent and has enough assets to cover its liabilities. Most crypto exchanges are privately held, meaning they don’t have to file financial statements with the Securities and Exchange Commission or get them audited.
The process aims to give investors certainty that their tokens are covered by reserves and their funds are safe, but the reports aren’t as thorough as an audited financial statement.
Source: More Crypto Exchanges Verify Reserves, But Questions About Assets Remain – WSJ
