OpinionMarkets
Proof-of-Reserve Attestation Still Falls Short of an Audit
By Research Desk1 min read
Proof-of-reserve attestations have become standard practice among exchanges, and they remain widely misunderstood. A Merkle proof of customer balances demonstrates assets; it says nothing about liabilities held off the tree.
An exchange can pass a proof-of-reserve check while being deeply insolvent, provided the liabilities sit outside the attested set.
Meaningful assurance requires a liability-side attestation from an auditor with access to the full balance sheet. Few venues have submitted to one.
