The most practical way to assess the financial viability of cryptocurrency exchanges is still to conduct a proof-of-reserve audit.
According to Cointelegraph, a top Securities and Exchange Commission officer has advised investors to be “extremely careful” when relying on a cryptocurrency company’s “proof-of-reserves”.
The acting top accountant of the SEC, Paul Munter, said in an interview with The Wall Street Journal on December 22 that “We’re telling investors to be very careful of some of the claims that are being made by crypto firms.”
Numerous cryptocurrency businesses have asked for “proof-of-reserves” audits since the collapse of the cryptocurrency exchange FTX in an effort to soothe worries about the solvency of their own exchange.
According to Cointelegraph, a top Securities and Exchange Commission officer has advised investors to be “extremely careful” when relying on a cryptocurrency company’s “proof-of-reserves”.
The acting top accountant of the SEC, Paul Munter, said in an interview with The Wall Street Journal on December 22.
Numerous cryptocurrency businesses have asked for “proof-of-reserves” audits since the collapse of the cryptocurrency exchange FTX in an effort to soothe worries about the solvency of their own exchange.
According to Ben Sharon, co-founder of the digital asset management firm Illumishare SRG, a proof-of-reserve audit is still a useful procedure to assess the financial soundness of cryptocurrency exchanges, but it is insufficient on its own.
Over the past 12 months, investors have lost millions of dollars as a result of the demise of significant cryptocurrency businesses including Three Capital Arrows, Celsius, and most recently cryptocurrency exchange FTX.
