Contrary to rumors that say Crypto.Com may become a victim of insolvency, the popular exchange has published an audited Proof of Reserves, as a way of rebuilding users’ trust.
Following the collapse of the then second-largest crypto exchange FTX, founded by Sam Bankman-Fried, trust for centralized exchanges lowered drastically.
As the FTX contagion continued to spread and other exchanges like AAX faded, it became crucial for centralized exchanges to prove that they hold enough assets to cover all of their clients’ balances and that users’ assets are accessible and fully backed. This act is what is termed “Proof of Reserves”, and it is usually conducted by independent auditors.
According to Kris Marszalek, CEO of Crypto.com, “providing audited Proof of Reserves is an important step for the entire industry to increase transparency and begin the process of restoring trust. Crypto.com is fully committed to providing customers around the world a safe, secure, and compliant means of engaging with digital currencies.”
Crypto.com Proof of Reserves
To let customers verify that their crypto assets are fully backed (1:1) on the exchange platform, Crypto.com employed the services of Mazars Group, a leading international audit, tax, and advisory firm to conduct their Proof of Reserves.
Leveraging advanced cryptographic procedures, Mazars confirmed the availability and backing of customer balances on the Crypto.Com exchange, per the announcement.
As further revealed, the renowned auditing firm having over 44k professionals in more than 90 countries, “compared the assets held in on-chain addresses proven to be controlled by Crypto.com with customer balances through an auditor-overseen live query of a production database as of December 7, 2022, 00:00:00 UTC.”
Among the major crypto assets whose balances were audited included XRP, Bitcoin (BTC), Ethereum (ETH), Tether (USDT), USD Coin (USDC), Shiba Inu (SHIB), Dogecoin (DOGE), Chainlink (LINK), and Decentraland (MANA).
The results of the exchange’s balance auditing indicated that the Ripple-backed digital token XRP had a reserve ratio of 101%, together with ETH, DOGE, and LINK. Meanwhile, BTC and SHIB had the same reserve ratio of 102%. The report also shows that USDT has the highest reserve ratio on Crypto.com, which is 106%.
“It is now easy for our existing users to verify that Crypto.com has a 1:1 reserve of all customer crypto assets deposited on its platform, and users can confirm the assets in their account are responsibly backed and accessible, both for the Crypto.com App and Crypto.com Exchange,” part of the announcement read.