Leading cryptocurrency exchange Kraken announced on Thursday the results of a proof-of-reserve audit, showing that it holds over $19 billion worth of Ether (ETH) and Bitcoin (BTC).
Almost $20 billion Stored on Kraken
As per a blog post, the audit was conducted by Armanino LLP, a consulting and technology firm in the US. The results didn’t include other assets – just BTC and ETH, including the $3.5 billion worth of ETH held in Kraken’s staking service, which is an ETH 2.0 validator.
This is the second independent audit conducted on the exchange since 2014. According to Armanino, the audit took several years of work to reconstruct a Merkle tree – a mathematical data structure that encapsulates hashes of different blocks of data – and prove every coin was on spot.
The audit comes as crypto companies are facing heavier scrutiny from regulatory bodies worldwide. According to Jeremy Welch, Chief Product Officer at Kraken, the exchange plans to conduct public proof of reserve audits annually.
Security and transparency for our customers has been at the core of our culture as a company, and the core of our practices and operations from the very beginning. Regular Proof of Reserves audits will demonstrate that, for Kraken, our client security and safety are a top priority.” —Said Welch.
Kraken to Allow Clients to Audit Their Accounts
Now the exchange is implementing auditing standards to allow clients to verify that their BTC and ETH balances are backed by real assets held in the exchange’s custody. Any client will be able to independently verify their balances by comparing select pieces of data with the Merkle root. However, the verification will only reflect the current state of the supported assets at the time of the audit.
“We offer Proof of Reserves because we’re passionate about this industry, and believe it is the future of finance and capital markets. With this audit, we’re taking historical best practices from certified public accounting firms and applying them in a new way that’s incredibly exciting” said Noah Buxton, blockchain practice lead at Armanino.
Kraken has been one of the most active crypto companies in the industry as of now. The veteran US exchange is working on an NFT marketplace with new features, such as allowing customers to use non-fungible tokens as collateral to borrow funds against.